Walmart has something Amazon doesn't to safeguard against holiday shipping delays: a network of brick-and-mortar stores that will serve as last-mile fulfillment centers
- Walmart's physical retail stores could give it a key advantage over Amazon during the holiday shopping rush.
- With industry experts expecting massive shipping delays thanks to a spike in online shopping amid the pandemic, both Amazon and Walmart are urging in-person order pick-ups.
- While Amazon has some brick-and-mortar stores plus its network of "Hubs," Walmart says more than 90% of Americans live within 10 miles of a Walmart store.
- Walmart is also using its stores as last-mile fulfillment centers, routing online orders to physical stores to be fulfilled and delivered to local customers.
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Walmart could beat Amazon in the holiday delivery rush thanks to its network of brick-and-mortar locations across the country.
As the holiday shopping season heats up, industry experts are warning of shipping delays amid a surge in online orders. But both Amazon and Walmart have come up with one solution that may help customers get their orders faster: using physical locations to speed the process along. For Amazon, this means having packages shipped to its small network of physical stores or neighborhood hubs. For Walmart, it means using its thousands of stores nationwide to route deliveries to customers — and that may provide a key advantage over Amazon.
Theses measures are being put in place at a time when online ordering has skyrocketed. Online ordering has surged 32% year-over-year, with consumers spending $58.9 billion between November 1 and November 23, according to Adobe Analytics data.
Retailers and shipping companies are now trying to keep up with the surge. Shipping companies are warning that they are already out of capacity ahead of the holidays, which could mean packages won't arrive on time — experts are describing the phenomenon as "shipageddon."
Still, there's good news for retailers: Many customers are opting for curbside and in-store pickup versus having everything shipped to their homes. That type of shipping has grown 115% year-over-year, and more than a quarter of orders are now fulfilled this way, according to Adobe Analytics. And stores that offer curbside and in-store pickup have a leg up over those that don't, Adobe found: 32% more shoppers end up buying products if they can pick it up from brick-and-mortar locations.
As the Thanksgiving weekend ushers in the official start of the holiday shopping season, here's how Amazon and Walmart, the two biggest retailers in the world, are using more traditional, physical locations to offset the impending shipping nightmare.
Amazon is urging in-person pick-up
In advance of the holiday shopping season, Amazon announced it will allow customers to have their products delivered to Amazon 4-Star and Amazon Books stores, the company's brick-and-mortar locations.
The service is free for Prime members and it's possible to get some products the same day you order them.
But Amazon's network of physical stores is limited — there are less than 100 total nationwide, according to Amazon's website — meaning this option is out of reach for most of the company's US customers. To allow for more in-person pick-up options, Amazon is offering the option to have packages shipped to "Hubs," self-service lockers or counters that are located in neighborhoods, apartment buildings, or inside stores.
Amazon billed these services as a way to help customers keep gifts a secret. But the option for in-person pick-up could also relieve some strain on Amazon's logistics network: The "final mile" of delivery, or the part of the shipping process where packages end up on customers doorsteps, can be the biggest hurdle for retailers. It's the most costly and unpredictable leg of the process, regardless of region — in rural locations, delivery locations can be spaced far apart, while in urban locations, traffic congestion can cause delays.
If an Amazon delivery driver is able to delivery packages in bulk to a store or "Hub," it could speed along the delivery process and alleviate some of the last-mile headaches.
Read more: Experts predict final-mile challenges will make or break retailers this year, so many are turning to third-party delivery services or acquiring their own tech
Still, Amazon's last-mile logistics outpace industry rivals, and the company is implementing additional delivery measures for the holiday shopping season, an Amazon spokesperson told Business Insider's Grace Dean. The company is adding new transportation capacity and more selection in fulfillment centers closer to customers, and adding 100,00 new full- and part-time employees, plus 100,000 seasonal employees to help meet demand.
Walmart is using its stores as last-mile fulfillment centers
For Walmart, the spike in online orders and its vast network for physical stores could serve as the winning combination during the holiday shopping season.
The company says more than 90% of Americans live within 10 miles of a Walmart, which means curbside or in-store pick-up should be an easy sell for most customers. Walmart offers contactless pick-up at its stores for more than 160,000 items, the company says.
Beyond in-person pick-up, Walmart is using its network of brick-and-mortar stores in another new way: as fulfillment centers. Walmart announced this week that it created a new program to route orders through local stores for fulfillment. The ordering process stays the same for customers, but the products may come directly from store shelves rather than a warehouse.
Though the program isn't available at every Walmart location — the company said more than 2,800 of its stores offer delivery — it could give Walmart a leg-up over its ecommerce competition.
Walmart is also hoping to keep pace with online orders by adding 42 ecommerce fulfillment centers inside its regional distribution centers. The "pop-up" fulfillment centers are expected to ship up to 30% of Walmart's holiday orders and are a way to marry ecommerce shipments with large volumes of goods being delivered to Walmart stores, Srini Venkatesan, an executive vice president at Walmart Global Technology, told The Wall Street Journal.
The move is another way for Walmart to cut shipping costs and use its physical retail business to its advantage during the holidays, as it will cut down on transportation costs: Venkatesan told the Journal that the online orders can be delivered to Walmart stores on the company's own trucks rather than shipped from fulfillment centers through UPS or FedEx.
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