Dive Brief:
- Walmart plans to open its fifth “next-generation” fulfillment center, the retailer announced last week.
- The 900,000-square-foot facility in Stockton, California, which is expected to open in 2026, will help the retailer handle online orders throughout the West Coast with more speed and efficiency.
- The upcoming facility builds on Walmart’s efforts to create facilities that boost the retailer’s next- or two-day shipping capabilities through an optimized process.
Dive Insight:
With its continued efforts to grow its list of next-generational fulfillment centers, Walmart is betting big on the benefits it can reap from offering quicker shipping and delivery.
In June 2022, Walmart unveiled plans to open four next-generation fulfillment centers in a move that it said would usher in a “new era of fulfillment” for the retailer. In announcing the development of the four facilities, Walmart said it worked with technology company Knapp to create an automated, high-density storage and retrieval system that condenses the retailer’s 12-step fulfillment process down to five steps and had already brought that system to the retailer’s fulfillment center in Pedricktown, New Jersey.
Walmart has said that the four next-generation facilities could provide 75% of the U.S. population with next- or two-day shipping on millions of items and that those centers, combined with its traditional ones, would bring those shipping capabilities to 95% of the U.S. population.
Walmart opened its first next-generation fulfillment center in Joliet, Illinois, last September and then opened the second next-generation facility in McCordsville, Indiana, which is about 20 miles away from Indianapolis, in June. The third is reportedly slated to open this fall in Lancaster, Texas, while the fourth is set to open next year in Greencastle, Pennsylvania.
Now, Walmart is looking to increase its fulfillment capacity for online orders on the West Coast. The Stockton facility, which will be located 50 miles south of Sacramento, aims to bolster Walmart’s existing presence in California, which include eight distribution centers, four fulfillment centers and 309 retail stores. The upcoming facility will need more than 1,000 workers, per the announcement.
“The announcement of our high-tech fulfillment center in Stockton commemorates yet another significant stride in our omni-channel retail efforts,” Karisa Sprague, senior vice president of fulfillment network operations for Walmart U.S, said in the announcement.
Sprague noted that the facilities aim to meet increasing customer demand for online shopping. During its second quarter, e-commerce at Walmart U.S. was up 24%.
Research from Brick Meets Click and Mercatus has found that mass merchants, like Walmart, have been gaining steam in online grocery sales and siphoning customers away from traditional grocers. Grocery e-commerce sales in August saw a roughly 9% year-over-year increase but then saw a 3.1% year-over-year dip in September, according to data from the firms.
As Walmart adds a new next-generation facility to its fulfillment network, stores continue to remain a key part of Walmart’s e-commerce strategy. The retailer noted that “double-digit” growth in store-fulfilled pickup and delivery led a second-quarter e-commerce sales increase for the company.
