Dive Brief:
- Walmart's U.S. business is seeing improved operational efficiency from automation investments in its supply chain, the company announced in its Q3 earnings release Thursday.
- More than 60% of Walmart's U.S. stores receive a portion of their freight from automated distribution centers, and over half of its e-commerce fulfillment center volume is moving through automated systems, per the release. Walmart said the increased use of automation is driving improved productivity on a per-unit basis.
- "That translates into lower shipping costs," EVP and CFO John David Rainey said of automated fulfillment on an earnings call Thursday. "Our shipping costs have been down consistently for many quarters in the 30% range. This was another quarter where we saw double-digit improvements, and that really helps our e-commerce economics, but also helps the overall SG&A of the company."
Dive Insight:
Although Walmart has been making progress in its push to implement automation, the retail giant is still in the early innings, David Guggina, EVP and Walmart U.S.' chief e-commerce officer, said during a Goldman Sachs conference in September. It's deploying automated technology within its perishable and non-perishable distribution networks, but the company is furthest along in the implementation process at its fulfillment centers, where products are shipped to customers, according to Guggina.
"They're about twice as productive as a legacy fulfillment center," he said, referring to the newer automated fulfillment centers. "And they're becoming more and more capable over time as we continue to bring more and more robotics into the different processes."
Walmart has launched several "next generation" fulfillment centers since 2022 featuring automated technology, with another slated to open next year. The company said in its latest annual financial report, filed in March, that it operates 29 dedicated e-commerce fulfillment facilities.
In recent years, Walmart has highlighted several uses of automation in its supply chain, including a high-density storage system developed with technology company Knapp, autonomous forklifts from Fox Robotics and inventory-tracking sensors from Wiliot that reduce manual tasks.
The retailer's stores are also playing an important role in its evolving fulfillment efforts. Walmart posted a jump of nearly 50% in store-fulfilled delivery in Q3, per an earnings presentation. About 35% of store-fulfilled orders were delivered in under three hours, close to the one-third the company reported in August.
