Making the most of the supply chain

As the world’s largest retailer, with a global network of over 10,000 stores, Walmart may not be considered a multi-channel leader. However, over the last year or so, the retailer has launched a broad range of initiatives which have enabled it to not only catch-up with many of its competitors, but to also move ahead in a number of areas.

The developments have been broad-based. They range from the launch of its first mobile app, which analyses social media feeds for new product opportunities, to digitizing classroom lists across the U.S., simplifying the process of shopping for back to school supplies.

Last month, the retailer also started testing an app which allows shoppers to use their own smartphones to scan their shopping in-store, driving improved productivity, and delivering a quicker shopping experience.

However, beyond the technical capabilities which Walmart has developed within its Global c-commerce unit, Walmart is also utilizing its recognized strength in supply chain excellence to further advance, and differentiate its multi-channel proposition.

In four U.S. markets, Walmart is now testing same-day delivery for online orders.

The Walmart To Go service is currently available in north Virginia, Philadelphia, Minneapolis, and San Francisco.

For a $10 fee, Walmart provides same-day delivery for online orders received before 12 pm.

The service is available for general merchandise products, while in San Francisco fresh food and groceries are also available to order as part of a broader test that has been underway in the Bay area for some time.

This initiative utilises existing store systems, has minimal impact from an operational point of view and enables Walmart to offer a service that most of its competitors, both brick-and-mortar retailers and online specialists, cannot provide.

Extending the initiative beyond the test areas to include its network of over . 4,000 U.S stores may be more complex.

While some of the orders are fulfilled through stock held at store level, there is also a need to fulfil directly from its distribution network.

The key challenge for Walmart will be to integrate these smaller packages within its store deliveries as volumes increase.

However, fulfilling a greater proportion of online orders using its existing supply chain is likely to help it lower the cost of fulfillment.

Over many years, Walmart has fine-tuned its operations between its distribution centres and stores. The closer it can take products to its shoppers itself, and the shorter the final leg of delivery to shoppers’ homes, which is currently outsourced, the more cost effective its multi-channel operations are likely to be.

Offering same day delivery also enables Walmart to leverage its existing store assets at a time when shoppers are increasingly migrating towards online shopping.

Adopting a multi-channel approach has resulted in around half of Walmart’s online transactions involving its stores in some form. This could be through shoppers collecting the products in store through its site-to-store service, paying with cash in-store for products ordered online, or fulfilling orders directly from store inventories.

While many brick-and-mortar retailers are viewed as being at a competitive disadvantage to online specialists due to their store and supply chain infrastructures, Walmart has turned this on its head.

Its stores and supply chain are enabling the retailer to reduce lead times and the costs of fulfilling online orders, rather than being an additional cost that it has to carry, helping it to remain price competitive in an era of increasing price transparency.

With supply chains often viewed as cost centres, in this case it is a driver of sales.