Shownotes
This Omni Talk Retail Fast Five segment explores Walmart’s reported pilot using stores as fulfillment hubs for marketplace orders.
Chris Walton and Shelley Huff debate whether Walmart’s massive store footprint can truly challenge Amazon’s logistics advantage and what this could mean for retail media, marketplace growth, and same-day delivery expectations. They also unpack the operational realities behind making this strategy work at scale.
⏩ Tune in for the full episode here.
#Walmart #Amazon #Marketplace #RetailTechnology
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Transcripts
Walmart is reportedly piloting a program that would use its own retail stores as fulfillment hubs for third party Marketplace orders, a move that could cut delivery times from the current one to two days down to as little as three hours, according to coverage from the Financial Times.
Speaker A:And Seeking Alpha, Walmart is running the pilot at several stores in Dallas.
Speaker A:No surprise, a market the company has historically used as a test bed for new technology.
Speaker A:And Manish Juneeja, a former Omnitok guest and SVP of Walmart's US Marketplace and Walmart Fulfillment Services, confirmed the test to the Financial Times.
Speaker A:Walmart is also reportedly using AI to help determine which store should carry which marketplace items for optimal fulfillment.
Speaker A:The effort is also being framed as a direct challenge to Amazon, which offers third party sellers same day delivery through its own fulfillment services.
Speaker A:Shelley Walmart has 4,600 stores within 10% of 90% of the U.S. population.
Speaker A:If it can turn those stores into same day fulfillment centers for marketplace sellers, how big a deal is it and what does it actually mean for Amazon?
Speaker B:Well, here's where we might disagree.
Speaker B:I have a lot of questions.
Speaker B:Yeah, I have a lot of questions about this one because there are a lot of practical limitations.
Speaker B:So we're, let's talk about Amazon first.
Speaker B:So Amazon has huge large distribution centers in a lot of metros across the United States.
Speaker B:In Phoenix, for example, where I spend a lot of time, I can get the majority of the items I order from Amazon, whether they're marketplace or first party, within a number of hours.
Speaker A:Yep.
Speaker B:And so if Walmart does this in my geography, it probably isn't going to be the thing that causes me to switch.
Speaker B:And because of the limitations of space in their Walmart stores, they're probably still not going to have the breadth of items that Amazon has.
Speaker B:And so there's a lot of practical limitations here.
Speaker B:However, when you look across the US broadly, it could make sense to folks that are not in a close proximity to a large Amazon warehouse, where then Walmart potentially could beat the delivery times of Amazon.
Speaker B:The question you have there is when Amazon's the number one most trusted retailer to get things to you on time, is that enough to cause somebody to switch?
Speaker B:That's the question.
Speaker B:If it's a couple hours sooner.
Speaker B:And then there's the practical question of how many of these marketplace items can you actually warehouse within a store?
Speaker B:And what does this inventory orchestration look like in a store?
Speaker B:Where did you know I've been in many Walmart backrooms in my day.
Speaker B:Yeah, where does you know the Walmart Item live, how is it allocated?
Speaker B:Like, how fast does it turn?
Speaker B:How does that compare to all your other items that you have in a Walmart store?
Speaker B:So while I think this test is interesting to watch, do I think it goes head to head with Amazon still?
Speaker B:No.
Speaker B:Do I think it has huge implications for Amazon as a company, broadly as a tech company?
Speaker B:No.
Speaker B:So I'm going to, I think it's a wait and see.
Speaker B:I think it's worth testing and worth seeing how consumers respond to this and whether you can get the right items and be predictive about that.
Speaker B:But what's interesting to me is it still doesn't solve the larger delivery problem for Walmart.
Speaker B:Getting closer to that 10% in big cities they're still not servicing.
Speaker B:So.
Speaker B:So it's interesting, the focus on this versus like there's this big population of people that still isn't being served by a Walmart.
Speaker B:So that's my perspective.
Speaker A:That's a really interesting point too because, yeah, to your point, like Amazon's definitely going after those, which is, hence the Phoenix, you know, metro area that you're talking about too.
Speaker A:You know, even though Walmart can reach that.
Speaker A:But you know, as you get into even more dense geographies too, like a.
Speaker B:San Francisco or like a New York or these, where the 10% is that like, you know, that isn't by a Walmart.
Speaker A:Yeah, right.
Speaker A:And you're right too because you know, the way Amazon's going to approach this is going to be more breadth in terms of the inventory that they're probably housing in those locations at least, you know, from what we know from this announcement, you know, you know, you know, in terms of what Walmart can house inside, you know, the back rooms of their stores.
Speaker A:That's interesting.
Speaker A:I'm not surprised to hear you kind of muted on this one.
Speaker A:But I think, I still think, I think I really like this move, Shelly.
Speaker A:I think I do.
Speaker A:And so I want you to talk me through it and tell me what I got right and what I get wrong here from your opinion.
Speaker A:But you know, I think when you think about.
Speaker A:So from the inventory question, right, Walmart's, Walmart's gonna take the items it knows it can bank on from its marketplace.
Speaker A:That's what it's gonna put in here, right?
Speaker A:And Walmart's thinking, I think they're thinking about this like as a Walmart.
Speaker A:Plus play too.
Speaker A:Like the app play.
Speaker A:Like, how do I get more people in my ecosystem?
Speaker A:How do I get people shopping for groceries and shopping for everything they need from me So I think that's a key, you know, a key piece of it here.
Speaker A:And they're going to offer.
Speaker A:The other cool thing about it is too, they can offer the warehousing for those bankable items via Walmart fulfillment services to their suppliers, which is something that Amazon cannot offer.
Speaker A:Like that just does not come as part of their fulfillment services where, hey, yeah, you can be close to 90% of the country with your items.
Speaker A:So that, that's, that's interesting to me as a hook to the supplier community.
Speaker A:And then from a consumer perspective, I also think it's a smart test because consumers don't know where things ship from or which items ship from where.
Speaker A:At the end of the day, this is just a search game.
Speaker A:So like, you know, having to be right on what inventory you actually put in the back room, the premium on that is probably less than I think we want to think it is, because either you're going to have it or you're not.
Speaker A:And I'm not going to know that on one day you could get it to me in three days and another day you could get it to me, you know, you know, in three hours, another day it might get me same day or even in two days.
Speaker A:Like, I just don't think consumers know that.
Speaker A:But.
Speaker A:So as long as Walmart can, can put the right items in the store in a way that's credible and they can do it at a mass where it moves the needle, you know, I think it's important, particularly for the marketplace.
Speaker A:So I, I don't know at the end of the day too, I mean, it means more sales, it means more a more reason to shop at Walmart because you can get things that quickly, especially when you look at, not just Amazon, all the competitive dynamics out a target or whatnot too.
Speaker A:And that just means more retail media dollars too, because the more marketplace items you're putting front and center in ways that people want to buy them or get them delivered, that's more profit too, the way this works, the way the engine works.
Speaker A:So, so I don't know what, what do you, what do you think I missed?
Speaker A:What do you think I got right?
Speaker A:What do you think I got wrong there?
Speaker B:Shelley, I don't disagree on the media dollar piece and the potential.
Speaker B:It's exciting to think about the potential of.
Speaker B:Could Walmart actually change the unit economics of marketplace more broadly in the United States?
Speaker B:However, I go back to.
Speaker A:It's a good point.
Speaker B:Still going to be the tip of the spear.
Speaker A:Yep.
Speaker B:And it's still going to be narrow and maybe if the experiment goes well, they'll change the fact that it's narrow in tip of the spear.
Speaker B:But in order to make an impact at that big of a scale on revenue, you have to tip that needle so far.
Speaker B:And my big question is, is it enough?
Speaker A:Yeah.
Speaker B:Could like actually make an impact at a scale that large?
Speaker B:So it's a wait and see.
Speaker A:Yeah.
Speaker A:That's really.
Speaker A:I think you just flipped me too.
Speaker A:I think you flipped me on this conversation because.
Speaker A:Yeah.
Speaker A:That.
Speaker A:I mean it.
Speaker A:And it's a big.
Speaker A:It's not easy to pull this off logistically too.
Speaker A:Right.
Speaker A:And so then the juice has got to be worth the squeeze.
Speaker A:That's what I'm hearing you say as well.
Speaker B:Absolutely.
Speaker B:But that's why it's a test.
Speaker B:And so they're going to learn something from it that might end up being a multi billion dollar game changer.
Speaker B:We don't know, so.
Speaker A:Right.
Speaker A:Yeah.
Speaker A:And we don't know.
Speaker A:We don't know the size and scale of some of these marketplace items that Walmart doesn't traditionally carry either, you know, and how well rounded, how well they round out the assortment too, I guess is another point I hadn't thought about before.