Walmart Installs In-Store Parcel Stations to Speed Up Last-Mile Delivery
Walmart is looking to turn some of its stores into “mini post offices” and expedite last-mile delivery this holiday season.
In yet another example of the retail giant’s big bets on fulfillment, Walmart is adding parcel stations to 40 stores by the end of the year. An undisclosed number of parcel stations are already currently open, but Walmart hasn’t specified where they’re located.
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Sourcing Journal reached out to Walmart for comment.
The parcel stations will help the retailer speed up delivery. Walmart employs a private fleet of 9,000 tractors, 80,000 trailers and more than 12,000 Class A truck drivers to transport more online orders.
Rick Watson, CEO and founder of RMW Commerce Consulting, said Walmart has spent the past several years testing local fulfillment centers attached to stores in recent years.
“This should be great for the amount of products they are able to fulfill out of their local stores, which ultimately does a few things: ship more inventory from closer to the consumer, which reduces their costs; and improve the sales per square foot of each store,” Watson told Sourcing Journal. “As the number of orders from each store increases, their routes from stores should get denser as well, which reduces their cost per parcel.”
The packages originate in Walmart’s fulfillment centers and move to a sortation center or directly to stores, where they are then delivered to a customer’s home using the last-mile delivery capabilities powered by Spark.
“In many ways you can think of a parcel station like a mini post office that receives and delivers packages,” wrote Jennifer McKeehan, senior vice president, transportation and delivery, Walmart U.S., in a blog post.
“For customers, parcel stations give them more time to place online orders on a greater assortment of merchandise for Next Day Delivery,” McKeehan added. “For associates, we’re making it easier and more efficient to distribute online orders from stores. Collectively, the entire process builds density to lower the cost of delivery, which we can reinvest back into the customer experience.”
Walmart plans to expand this capability to other locations next year.
According to McKeehan, the parcel stations will eventually serve other businesses signed up with Walmart GoLocal, the retail giant’s B2B local delivery service.
Walmart says that more than 4,000 of its 4,700 stores operate as delivery hubs, fulfilling and delivering different order types. Some 90 percent of the U.S. population lives within 10 miles of a Walmart store. Stores already fulfill more than 50 percent of digital orders, CEO Doug McMillon said in an August earnings call.
The parcel stations build on what is already a strong suit for Walmart domestically, with U.S. online sales growing 24 percent in the third quarter, compared to an international e-commerce sales decline of 3 percent.
“The team has continued over the last few years to expand our [delivery] capacity,” said John Furner, president and CEO, Walmart U.S. in a recent earnings call. “And more importantly, they’ve made improvements on key metrics like the one we call perfect order, which is getting customers what they want, when they want.”
With Amazon regionalizing its fulfillment network, cutting the distance between facilities to the customer by 15 percent since the start of 2023, both Walmart and Target have sought to fortify their own last-mile capabilities.
Walmart has shortened delivery times at more than 80 percent of its stores to same-day for many goods, while lowering store-to-home delivery costs by 15 percent. It expanded the Express Delivery service to late-night consumers, offering delivery of more than 200,000 items until 10 p.m. on orders placed by 9:30 p.m.
Earlier this year, Target invested $100 million in its last-mile delivery capabilities as it expands its sortation facility network to 15 by 2026.
“I think there’s still much to do in front of us,” said John Mulligan, executive vice president and chief operating officer at Target during a recent earnings call. “We’re still optimizing routes. We’re still just getting into much higher capacity vehicles which will create more density, which will create more savings. And then what we’ve said over the next few years, we’ve got at least five more of these [sortation centers] to open.”
The moves by retail’s heavy hitters suggest significant market expansion of last-mile delivery, not just in the U.S., but worldwide. According to recent market research from RationalStat, the global last-mile delivery market is expected to expand 8.1 percent per year to reach $137.4 billion by 2030, up from $79.9 billion in 2023.
