Tech & E-Commerce
Walmart Reduces U.S. Delivery Costs by 40% Per Order
Walmart has achieved a significant milestone by reducing U.S. delivery costs by 40% per order in Q3, marking the third consecutive quarter of such savings. This achievement is driven by key operational improvements, including delivery densification, the growing use of automation in supply chains, and increased expedited delivery orders.
Key Factors Behind Cost Reductions
- Delivery Densification
- Orders per delivery route increased by 20% year over year, enabling more efficient use of driver time and resources.
- Automation in Fulfillment Centers
- Walmart now handles over 50% of its fulfillment center volume with automation, double the percentage from the previous year.
- Expedited Delivery Growth
- More than 30% of customers paid for faster delivery (within three hours or less), providing a revenue boost while optimizing delivery schedules.
Performance Metrics
- Store-Fulfilled Delivery Growth:
- Sales increased by nearly 50% YoY, with a monthly run rate surpassing $2.5 billion.
- Walmart now offers delivery from 4,500 stores, up from 4,200 last year.
- Consistency in High Delivery Volume:
- Walmart has maintained 12 consecutive months of delivery sales above $2 billion.
Focus on Speed and Efficiency
While cost savings are critical, Walmart is also prioritizing faster delivery speeds to compete with rivals like Amazon:
- Over 30% of orders are fulfilled within three hours or less.
- Same-day and next-day deliveries remain a key focus, with President and CEO Doug McMillon highlighting the importance of fast service to meet customer expectations.
Rainey emphasized Walmart’s willingness to delay e-commerce profitability slightly to maintain a competitive edge in delivery speed, reflecting its long-term strategy to win customer loyalty.
Implications for Walmart’s E-Commerce Future
- Walmart’s efforts to streamline costs while improving speed signal its ambition to become a leading player in online retail.
- By investing in automation, route optimization, and expedited delivery options, Walmart is steadily building a robust infrastructure that could challenge Amazon’s dominance.
- As consumer preferences continue to shift toward faster and more efficient delivery, Walmart’s strategy is poised to drive growth and profitability in the years ahead.