Dive Brief:
- Sam's Club will hire 2,000 permanent, full-time supply chain workers to staff its fulfillment and distribution centers this holiday season, the company announced Thursday. Fulfillment center workers will receive a $2 hourly pay increase during peak season.
- Sam's Club is launching a ship-from-store (or club) program for the first time this quarter covering roughly 100 stores. The company expects approximately one-fifth of all online orders to ship from Sam's Club locations, according to the announcement.
- The membership-based retailer already has same-day delivery and buy online, pickup in-store programs in place, but e-commerce fulfillment has taken place outside of stores to date. The company converted several closing stores into fulfillment centers in 2018 (anticipating further growth in e-commerce) and opened a new fulfillment center outside of Los Angeles last month.
Dive Insight:
Retailers have been fast-tracking omnichannel skills in 2020 as the pandemic boosted e-commerce and introduced more customers to omnichannel options en masse. Retailers like Walmart and Target with ship-from-store already thoroughly engrained in operations had a head start. For ship-from-store-skeptics, the pandemic has shown the value of this fulfillment option.
Sam's Club parent company Walmart has been shipping e-commerce orders from stores since before the pandemic, but it dialed up the intensity considerably in the spring when it added 235,000 workers to handle increased e-commerce demand. Walmart is hiring an additional 20,000 fulfillment workers for the upcoming holiday season and CEO Doug McMillon said in August that the increased resources dedicated to ship-from-store would be permanent.
That zeal for omnichannel has taken a bit longer to show in Sam's Club operations. In the most recent quarter, e-commerce sales were up 39% YoY compared to Walmart's 97% YoY. The spread of ship-from-store from Walmart to Sam's Club may indicate the leadership team is happy with the strategy.
Walmart's e-commerce business has gained profitability during the pandemic, in part due to volume. But fulfillment methods play a role too.
Combining an extensive store network (nearly 600 Sam's Clubs worldwide) with an existing e-commerce fulfillment network will give the company more options to fulfill an order and potentially shorter distances for each order to travel, which could cut costs. The announcement from Sam's Club says the company expects ship-from-store to speed up e-commerce fulfillment too.
Though Sam's Club may be behind Walmart in omnichannel development, it is somewhat ahead of membership rival Costco — especially when it comes to grocery, according to an analysis from market research firm 1010data. Since Costco outsourced same-day services to Instacart, online grocery sales have been on the decline while Sam's continues to grow in this fast-expanding category. Costco's online sales grew from 5% of the total pre-pandemic to 8% in September, and CFO Richard Galanti indicated last month that the company is slowly warming to more omnichannel innovation.
"We may be occasionally stubborn on something, but we're not completely intransient if we see we need to do something, " Galanti said when asked about omnichannel on an earnings call. "We figure out how to do things in a little different way than others and we’ll continue to do that."
Sam's Clubs' is the latest in a long string of hiring announcements from major retailers and 3PLs totaling in the hundreds of thousands. Warehouse employment reached its all-time peak in September, according to the U.S. Burea of Labor Statistics — a trend accelerated by the pandemic.
