Walmart+ won’t make Amazon quake, but that could be beside the point

Walmart has an ace-in-the-hole, however, and that is its vast store network. It operates about 4,800 stores, more than 3,500 of them supercenters. Amazon, by contrast, operates no physical stores along the lines of Walmart. Amazon has 576 facilities of varying types across the U.S., according to recent data from MWPVL International, a consultancy. The relative lack of physical density forces Amazon to operate in a different manner than traditional big-box retailers. Yet it remains the dominant player in e-commerce, with about a 50% share of the market.

Marc Lore, Walmart’s e-commerce chief, said in a 2019 interview with Business Insider that the stores handle orders for same-day delivery while its fulfillment centers make one-day deliveries. Walmart has not publicly confirmed the launch of the Walmart+ service. It declined to comment Monday or make Lore available for an interview.

Writing recently on online financial site The Motley Fool, contributor Jeremy Bowman said Walmart+ may be the company’s “most important step yet” to improve its e-commerce capabilities and make online commerce a sustainable growth engine. 

Since 2017, Walmart’s U.S. e-commerce sales have grown by about 40% annually; sales increased by 74% in its fiscal first quarter, which ended May 1. That time period included the most severe of the government-ordered lockdowns to stop the spread of the novel coronavirus.

If nothing else, the Walmart initiative will “bring some much-needed competition to the market,” said Glenn Gooding, president of iDrive Logistics, a consultancy.

In his post, Bowman wrote that Walmart+ “doesn’t have to beat Amazon Prime to be successful. By leveraging the company’s advantages in grocery and its store base, the new service can boost sales, reward customers, and lock in a loyal customer base.” In so doing, it should boost consumers’ spending with the retailer, he said.

Until recent years, traditional retailers have not thought of their stores as competitive weapons against pure e-tailers like Amazon. Walmart, for example, chose to view its stores as separate, and very profitable, entities. It wasn’t until e-commerce began gobbling up more of total retail sales, and Amazon had left Walmart’s initial paltry e-commerce offerings in the dust, that the Bentonville, Arkansas-based behemoth began to reconsider the role of its physical network in the e-commerce mosaic.

Store networks are an integral part of what Jim Tompkins, founder and chairman of global supply chain consultancy Tompkins International and arguably the most influential industry guru of the past 50 years, called “unichannel fulfillment.” The term describes a unified channel in which neither e-customers nor in-store customers exist, and which focuses on an integrated and seamless customer experience without any channel differentiation, according to Tompkins. A robust store network gives retailers the optionality to fulfill from anywhere, thus delivering the right product, from the right place and at the right price, Tompkins believes.