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Walmart Shifts its Focus From Store to Distribution Growth

Walmart Shifts its Focus From Store to Distribution Growth

BENTONVILLE, AR - Could the secret to taking on the Amazon retail beast be in a massive expansion of distribution power? It seems like this is the strategy Walmart, one of the powerhouse e-commerce provider’s biggest rivals, is employing to win the retail war. 

In an announcement made this morning to USA Today, Walmart revealed it would be scaling back the number of stores it plans to open in the U.S. over the next three years to 230 openings in 2016, 130 in 2017, and just 55 in 2018. Instead, the company’s Vice President of E-Commerce Supply Chain, Justen Traweek, told Reuters it will double the number of its online sales warehouses, reaching 10 before 2016 is through. Prior estimates pinned the number at just 8 by the end of 2017.

Walmart Online Fulfillment Center

These warehouses may be the best way for the retail giant to grow its e-commerce revenue, suggests source The Consumerist. With large distribution centers come large product stocks, reduced shipping times, and cut shipping prices—all recipes to providing more value to consumers at lower prices. 

Justin Traweek, Vice President e-Commerce supply chain, Walmart (Photo Credit: Harry Fisher/The Morning Call)

“We have doubled our capacity in the last 12 months and that allows us to ship to a majority of the U.S. population in one day,” Traweek adds in his interview with Reuters.

This shift in strategy comes just after Walmart announced an over $3 billion acquisition of e-commerce company Jet.com. According to a report by USA Today which cites Moody’s Investor Service, Walmart gets about $14 to $16 billion of its sales through online business. While this maybe isn’t a substantial chunk of Walmart’s overal sales as of yet, CEO Doug McMillon told the news source that he expects that to start to change in the near future.

Doug McMillon, President and CEO, Walmart

“We are encouraged by the progress we’re seeing across our business and we’re moving with speed to position the company to win the future of retail,” McMillon said. “Our customers want us to run great stores, provide a great e-commerce experience, and find ways to save them money and time seamlessly—so that’s what we’re doing.”

Walmart Distribution Center

With these investment scheduled to be complete before the year is through, we may see results as soon as next year. Watch for more coverage from AndNowUKnow as the retail power grab continues.