Retailer working to speed delivery

2 Wal-Mart sites back Web sales

Wednesday, October 2, 2013

A new facility in Fort Worth dedicated to filling online orders from Walmart.com and another opening early next year in Pennsylvania position Wal-Mart Stores Inc. to better compete with e-commerce giant Amazon, officials said Tuesday.

The online order-filling centers, along with Wal-Mart’s 4,100 stores and 130 distribution centers nationwide, put the retailer’s reach within 5 miles of two-thirds of the country’s population.

With shop-to-doorstep delivery in two days or less 50 percent of the time, the latest move elevates Wal-Mart’s game in the race to attract online consumers.

“This is where they put their money. This is where the growth is coming in retail,” said Brian Yarbrough, a consumer analyst for Edward Jones in Memphis.

“If you’re just a brick and-mortar retailer, unless you’ve got something really special, I think you’re in trouble without Internet sales,” Yarbrough said. Brick and mortar refers to the physical presence of a building.

Consumers use their cellphones, tablets and computers to make price comparisons, as well as order online.In just two years, Walmart.com has sped up deliveries by 15 percent and reduced costs by 10 percent by routing online orders either to some Wal-Mart retail stores or through one of the company’s distribution centers.

The company expects sales from its e-commerce business to top $10 billion globally this year, compared with $7.7 billion in 2012, according to a recent report by Internet Retailer. Besides domestic sales, Wal-Mart’s online sales come primarily from Brazil, China and the United Kingdom.

It’s still a long way from Amazon’s $61 billion in sales reported for 2012, though Wal-Mart’s total business for last year was $469 billion.

Wal-Mart remains the largest retailer of any kind on the planet.

And the retailer is not trying to play catch-up by grabbing workings from someone else’s playbook - namely, Amazon.

“Our approach to e-commerce is fundamentally different from how anyone else is doing it,” said Wal-Mart spokesman Ravi Jariwala, speaking from Wal-Mart’s ecommerce hub in California’s Silicon Valley. “I don’t know of another retailer out there that has 4,100 stores, the website, the mobile capabilities, the distribution centers and a transportation network that covers the United States as well as we do.”

The online order-filling center in Fort Worth is 800,000 square feet, and it began shipping orders last week. The planned facility in Bethlehem, Pa., will consist of more than 1 million square feet. Together, the centers will be stocked with hundreds of thousands of items - electronics, toys, apparel, fitness equipment, sporting goods and more - and will eventually have at least 625 full time jobs in both cities.

The operation in Texas will be operated by Brentwood, Tenn.-based OHL, a global supply-chain-management solutions company. Wal-Mart will run the facility planned in Pennsylvania. For the Christmas season, Wal-Mart will have twice as many products available on Walmart.com as the 5 million plus offered last year, including its own items and items offered through marketplace sellers on the site.

Even with shipments originating directly from stores, inventories shouldn’t be effected by the push for better and faster delivery of online orders, Yarbrough said.

“Wal-Mart is world-class when it comes to efficiency,” he said.

Jariwala explained it further.

“We’ve got a decision engine that is a very complex set of algorithms,” he said. “We can identify where the customer is and where in our [order] fulfillment network should we be sourcing that product from.”

Business, Pages 25 on 10/02/2013