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Walmart Plans ‘Popup’ Distribution Centers to Handle Holiday Volume

While popup stores have long been a driver of experiential traffic in retail stores, the decreased foot traffic and skyrocketing e-commerce demands stemming from the Covid-19 pandemic have spurred Walmart to put a modern twist on the popup experience during the holiday season—through its own distribution centers.

Walmart is leveraging 42 of its current regional distribution centers (RDCs) and transforming them into popup e-commerce distribution centers (EDCs) to meet the increasing number of online orders this holiday season. These RDCs traditionally ship pallets of goods to the Walmart stores, instead of sending packages directly to customer homes.

The retailer anticipates that up to 30 percent of its holiday volume will be shipped from the popup EDCs, according to a LinkedIn post from Srini Venkatesan, executive vice president at Walmart Global Tech.

Venkatesan said that Walmart’s proprietary multi-channel sourcing engine (MCSE) scans the entirety of the company’s fulfillment network in less than a second and assigns online orders to these EDCs when it determines which offers the fastest and most efficient fulfillment option.

In another blog post, Greg Smith, executive vice president of supply chain at Walmart U.S., said that setting up the EDCs enables the retail giant to move more product to customers quickly, using the expertise of its supply chain and technology associates, without the delay that comes with building new facilities.

“The flexibility to popup an EDC anytime our supply chain network experiences peak demand allows us to deliver for our customers when they need us the most all the while consistently following the health and safety measures we have had in place for months,” Smith wrote.

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In particular, some of the recent technology enhancements instrumental in making this happen include implementing a “random stow” algorithm for both sortable and non-sortable items and improving pick times to avoid congestion in aisles with frequently purchased products. Newer tools also include warehouse management app compatibility, which enables workers to pick orders on their smartphones, as well as a cloud-based integration platform that manages multiple third-party fulfillment solutions and enhanced visibility into entire fulfillment operations to meet promised delivery dates.

That flexibility of the network will come in handy once the holiday season is over, according to Venkatesan, as the EDCs will be able to scale up and down depending on future demand.

The improved technology should aid new, temporary employees populating the distribution centers. In September, Walmart announced plans to hire 20,000 seasonal e-commerce warehouse workers.

Additionally, transportation costs could be mitigated with the new EDCs. Walmart can use its trucks to move online orders from the popup sites to stores before handing them off for last-mile delivery, instead of shipping parcels from its big fulfillment centers through carriers such as UPS and FedEx.

Walmart and other major retailers have already been using stores to handle fulfillment through services such as buy online, pickup in store, curbside pickup or ship-from-store delivery, but Walmart’s popup plan suggests these tactics are still limited in the face of record online orders.

Since the end of the summer, the parcel carriers had warned of delivery delays and increased shipping costs, while retailers urged consumers to get orders in earlier than normal, both results of coronavirus-driven demand that promises to strain peak season supply chains.

Walmart’s fulfillment experiments extend to four stores

The retail giant also revealed in late October that it was testing several technologies in four U.S. stores to further bridge the physical-digital gap and enable the locations to serve as online fulfillment centers.

Walmart’s first test store is moving most of its in-store apparel assortment to its website, and is in the process of identifying other hard-to-manage categories, so that the company can better test and learn how it can make all its eligible items “truly omni-available” across channels, according to John Crecelius, senior vice president of associate product and next generation stores at Walmart U.S.

Walmart Turns Store DCs into 'Popup' E-Commerce Warehouses for Holiday
Walmart’s associate-facing augmented reality app. Walmart

Within the test stores, Walmart is trying to improve inventory speed from backroom to the sales floor via a recently developed associate-facing mobile app. Associates can hold up a mobile device in the backroom, and the app will leverage augmented reality to highlight the boxes that are ready to move to the store shelf when inventory gets low. This also eliminates the need to scan each box separately.

The company is also testing new ways to combine in-store signage and handheld devices to help associates navigate to the right locations when picking items for an online order. Walmart reports that associates are 20 percent more likely to find the item on their first attempt in some categories that tend to be difficult to pick, meaning that consumers can their orders get filled faster.

Finally, these stores will continue to build upon a new experimental checkout introduced earlier this year by testing different hardware and software solutions geared at enhancing contact-free checkout.

Amazon builds new Mississippi fulfillment center

While Walmart is trying to go non-traditional to alleviate its pandemic pressures, Amazon is taking future holiday seasons in account by going a more conventional route, building a new state-of-the-art 700,000-square-foot fulfillment center. The site, located in Madison County, Miss., is expected to create over 1,000 full-time jobs and mark’s Amazon third facility in the southern state.

This fulfillment center will be the first facility located in the state to feature Amazon’s robotics technology. The e-commerce giant launched its first Mississippi facility, a 554,000-square-foot in Byhalia in 2019, and a new 1 million-square-foot fulfillment center in August in Olive Branch.