Walmart is using its thousands of stores to battle Amazon for e-commerce market share - CNBC

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Even with that backdrop, Ward said Walmart benefits from having a reputation for value.
Erin Black | CNBC Ward said his vision for the business is straightforward: to grow online sales while making it easy for customers to shop however they choose.
Over the past two weeks, Walmart has rolled out a change meant to eliminate that issue, Ward said.
We don't want to show any plumbing," Ward said.
"A driver might pull up to one of our stores and receive a handful of packages for Walmart customers, they might then go and pick up a handful of packages for a different business or company's customers, then they'll follow a highly optimized route, which takes advantage of that density and brings the cost down," Ward said.

Walmart is using its thousands of stores to battle Amazon for e-commerce market share - CNBC

BENTONVILLE, Arkansas — Walmart's cavernous stores are known for aisles of low-priced groceries, paper towels and apparel. Now, those big boxes are hubs for its e-commerce business, serving as launch pads for delivery drones, automated warehouses for online grocery orders and departure locations for direct-to-fridge drop-offs. Eventually, they will help pack and ship goods for individuals and independent companies that sell on Walmart's website through its third-party marketplace. "The store is becoming a shoppable fulfillment center," Tom Ward, chief e-commerce officer for Walmart U.S., said in his first interview since stepping into the role. "And if the store acts like the fulfillment center, we can send those items the shortest distance in the fastest time." Walmart is leaning into two key advantages to drive its e-commerce business: its roughly 4,700 stores across the United States and its dominance in the grocery business. Ninety percent of Americans live within 10 miles of a Walmart store. The company is the largest grocer in the U.S. by revenue. Walmart wants to expand its assortment of merchandise, improve the customer experience and increase the density of delivery routes to turn e-commerce into a bigger business. The Covid-19 pandemic created an opening for Walmart to expand its online business. The retailer's e-commerce sales surged, helped in large part by the curbside pickup service it launched years before other retailers scrambled to set on up during the pandemic. One dollar out of $4 that Americans spent on click-and-collect orders last year went to Walmart — more than any other retailer, according to an Insider Intelligence estimate. The global health crisis also fueled Walmart's sense of urgency to better compete with Amazon, the clear leader in e-commerce. Amazon has 39.5% of online market share in the U.S. compared with Walmart's 7%, according to estimates by research firm eMarketer. Last year, based on the 12-month period from June 2020 to June 2021, consumers spent more money at Amazon than the big-box retailer for the first time, according to company filings and estimates by the financial research firm FactSet. But the e-commerce environment has gotten tougher in recent months. Gains have slowed dramatically as more customers return to stores. Even Amazon saw stagnating numbers in the most recent quarter, reporting its slowest sales growth rate in about two decades. Plus, as Walmart's fuel and freight costs mount and inflation hovers at a near four-decade high, customers are buying less of general merchandise, like new clothes, because more of their money is going toward groceries and gas. Food sales have lower margins, making it harder to profit from online sales. Walmart's shares sank last month, as it missed quarterly earnings expectations and slashed its outlook for profits. It marked the retailer's worst day on Wall Street since October 1987. Even with that backdrop, Ward said Walmart benefits from having a reputation for value. "Price is critical for our customers," he said. "They trust us to bring them the lowest prices. And there's 60 years of experience of managing that in this business." Leaning on stores Tom Ward, chief e-commerce officer for Walmart U.S., said he wants to make it easy for customers to shop however they choose. To do that, Walmart is using its thousands of stores to increase delivery speeds and decrease company costs. Erin Black | CNBC Ward said his vision for the business is straightforward: to grow online sales while making it easy for customers to shop however they choose. The company's vast number of stores allows Walmart to outmatch its competitors, he said. For example, the retailer can pinpoint the nearest store to a customer who searches online for a printer. Instead of sending the printer from a fulfillment center hundreds of miles away, a team of personal shoppers at the store can pack it, pass that to a delivery driver in Walmart's network and send a notification to the customer to say the product is on the way. "It might arrive in a handful of hours after they bought it online, as opposed to a couple of days later," he said. "So it's a transformational experience in terms of speed, which is really hard to replicate without that fantastic footprint that we have." Walmart has 31 fulfillment centers across the U.S. — but more than 3,500 stores, or about 75% of its total locations, fulfill online orders that would be otherwise routed through an fulfillment center. What's more, the company said it can reach 80% of the U.S. population with same-day delivery. Walmart hopes using its stores will woo third-party sellers, too. Independent sellers who sign up for Walmart's third-party marketplace can pay for Walmart Fulfillment Services, a business that provides supply chain services from storage to shipping from the retailer's warehouses. That division is led by an Amazon veteran, Jare Buckley-Cox. Walmart will soon start packing and sending third-party sellers' goods from stores, which will make deliveries faster and more cost effective, according to Buckley-Cox. She didn't specify a timeline for that service, but said it's coming in the "near future." Sellers who gain popularity on the company's website have a chance to make it on to store shelves, too, she said. Online evolution The rapid acceleration of online shopping on Walmart's website and through its app magnified some of its challenges. The retailer had two apps — one dedicated to online grocery shopping and another for general merchandise, from socks to camping chairs. Last summer, it merged the two together into a single app. The company also had separate teams of buyers for its stores and for its website, which led to conflicting assortment and pricing. The two teams were blended into one shortly before the pandemic. In addition, some customers got confused or frustrated by the strange ways Walmart fulfilled purchases in the same online order. This spring, a member of Walmart's e-commerce team experienced that firsthand when ordering dinner ingredients for Taco Tuesday. Taco fixings arrived through home delivery that day, but the taco seasoning came in the mail days later. Over the past two weeks, Walmart has rolled out a change meant to eliminate that issue, Ward said. When customers fire up the app to shop, they choose if they want items through shipping, pickup or delivery. Depending on that choice, assortment is tailored to what items — such as taco seasoning — are actually on hand. A package moves along a conveyor belt inside a Wal-Mart Stores Inc. fulfillment center in Bethlehem, Pennsylvania. Michael Nagle | Bloomberg | Getty Images "We don't want to show any friction. We don't want to show any plumbing," Ward said. "We want to solve all the magic behind the scenes and make it seamless so they can buy a filet steak and a bag of apples and a T-shirt and a microwave and they can get it fulfilled anywhere that they want to get it fulfilled." Another emerging piece of Walmart's plans is its drone delivery service, which Walmart will expand to 37 stores across six states by the end of the year. That development will enable it to reach 4 million households, according to the company. Down on the ground, Walmart wants every delivery driver in its network to have densely packed routes with numerous stops in every neighborhood. That commitment led to the launch of GoLocal last year, which allows mom-and-pop shops and publicly traded companies, including Home Depot, to use Walmart's independent drivers to drop off online purchases. "A driver might pull up to one of our stores and receive a handful of packages for Walmart customers, they might then go and pick up a handful of packages for a different business or company's customers, then they'll follow a highly optimized route, which takes advantage of that density and brings the cost down," Ward said. Its membership program, Walmart+, is another way the retailer is trying to score more online sales. The $98-per-year service includes free shipping of online purchases and free grocery deliveries to the home for orders of $35 or more. On Thursday, Walmart kicks off Walmart+ Weekend, a new sales event that resembles Amazon's Prime Day with deals only available for members. Walmart in your house
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