Walmart has begun the rollout of its fulfillment service for third-party marketplace sellers, the company told Supply Chain Dive in an email.
Walmart Fulfillment Services (WFS) offers storage, picking, packing and two-day shipping, returns and customer service and will eventually expand to next-day shipping according to the company. The service was developed with marketplace seller input at a Walmart fulfillment center in Shepherdsville, Kentucky and requires no monthly membership fee. The program will expand to other fulfillment centers this year, said a spokesperson adding: "Kentucky is a strong central location for us as we can guarantee 2-day delivery anywhere in the country."
"There are lots of reasons to like the [fulfillment] business. We're feeling good about the start. We built the technology. We've got a handful of sellers using it. They like it. We're seeing good results. But it's something that we're going to, you know, take slowly to make sure it's right before we really, you know, blow it out," Marc Lore, CEO of e-commerce U.S. said at the company's investor conference in New York City last week.
According to top executives, fulfillment services are as much about driving in-demand products to Walmart.com as they are about driving additional revenue from its existing e-commerce infrastructure.
"Walmart Fulfillment Services is a critical part of our strategy," Lore said at the conference. "There are merchants on third-party that we want to have that simply don't have fulfillment capabilities. And so we're not able to get that assortment on the website. So that's really the first priority is to really focus on those brands and getting assortment for customers."
In a video to be posted on Walmart's website Tuesday afternoon, Jare' Buckley-Cox, vice president of WFS said, "There haven't been many options that sellers trust to grow their business."
The options have grown substantially in the last year as e-tailers realize that fulfillment is a major pain point for small e-commerce businesses — one they're willing to pay to alleviate.
On top of Fulfilled by Amazon, there are marketplace-agnostic services like Shipbob and Flowspace, Shyp and more. Selling platform Shopify got into the fulfillment game last year as did marketplace eBay.
Carriers want in too with UPS-backed Ware2Go and FedEx fulfillment vying for shippers' business while also looking to wring a bit more revenue out of parcels they already carry. UPS also launched its eFulfillment offering for small- and medium-sized businesses last year.
It's a crowded field, full of diverse networks, technology and interests. But for shippers, the central questions are service and speed. Amazon and Walmart are promising both — with pricing on the back of an already immense volume of parcels.
Both have struggled to reign in costs for their e-commerce operations, especially after Amazon's shift to one-day shipping which Walmart quickly matched. Adding revenue streams is a logical step. Shipping from the same warehouses with Walmart's owned inventory will help shipment economics since it could lead to fewer packages, but larger orders shipped out, Lore said.
At the same conference, Walmart executives including Lore emphasized Walmart stores have a growing role to play in fulfilling e-commerce orders, which would mean fewer items shipped from warehouses where marketplace items are stored. Lore also emphasized the company is working toward ultimate flexibility when it comes to delivery channels so perhaps the increasing complexity of Walmart's e-commerce fulfillment channels is nothing a good algorithm can't handle.
This story has been updated to include additional details from Walmart.