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Walmart Moves to Improve Omnichannel Experience With New Online Distribution Centers

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Walmart is making strides to build a true omnichannel experience and boost online sales, adding two new fulfillment centers for web orders in an effort to keep up with e-commerce master Amazon.com.

The retail giant announced early last month that they would add a facility in Texas and one in Pennsylvania, which will be its largest ever, both of which will be dedicated solely to filling online orders and getting goods to shoppers faster.

In addition to the new distribution centers, Walmart says it is positioned to ship online orders from stores. Orders will either be filled by a store employee picking the goods from shelves and packaging them to be shipped or with the use of lockers–as Amazon does–placed in stores to hold goods until customers collect them.

Joel Anderson, president and CEO of Walmart.com said, “With our dedicated online facilities and 4,100 stores within five miles of two-thirds of the U.S. population, we gain a significant advantage by being positioned in the most important location — close to our customers.” He added that, “This unique combination allows us to get more products to our customers faster and at a lower cost.”

In a world where the seamless transition between shopping from home, shopping in-store and shopping while mobile is increasingly essential to keeping customers, creating processes that facilitate this new kind of shopping experience is necessary for online sales growth.

Walmart said, this holiday season customers will have access to more than five million products at Walmart.com, more than double what was available on the site last year, and the company expects that number to exceed ten million in coming years. E-commerce sales should surpass $10 billion globally this fiscal year over last year’s $7.7 billion, the retailer said, but that is still a far cry from Amazon’s $61 billion in 2012.

Shipping costs could also stall the retailer from getting anywhere near to Amazon-level sales as costs to ship from Walmart can range from $5 to $7 per package compared with $3 to $4 at Amazon–a cost that doesn’t create an incentive to buy online for goods that are generally so low cost, the Wall Street Journal reported.

The only way for Walmart to compete is to do what Amazon can’t: Use brick-and-mortar to its advantage. For things that buyers shy away from snagging online, like denim because of the importance of fit, merging the physical and virtual shopping world will be key. If retailers can capitalize on tech-connected in-store experiences that make shopping in-store as easy as shopping online, the omnichannel experience could reach new levels of success.

Nadia Shouraboura, a partner in retail technology company Hointer Inc. and one of Amazon’s tech aces, helped design and recently installed specially configured fitting rooms where shoppers can use mobile devices to call for new sizes or styles of jeans to try on. Here’s how it works: Customers scan goods into a Hointer app or take recommendations the app provides, click what they’d like to try on and in just about 30 seconds, jeans arrive in the fitting room from a chute connected to the warehouse. If that pair isn’t quite right, the shopper returns it through another chute and can click for a new pair.

But as Walmart plays catch-up from years of snubbing the online retail space, this type of technology may be further away.

For now, Walmart said it will continue to expand its large-scale online fulfillment centers and using stores to ship online orders to customers. More than 10 percent of product ordered from Walmart.com goes from the store to the customer’s door, with more than half delivered in two days or less. Walmart said they’ve increased delivery speed by 15 percent in the past two years and reduced costs by 10 percent due in part to the @WalmartLabs algorithm which decides the best way to ship based on the customer location and items ordered.

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