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Walmart Tests Shipping Goods From Third-Party Vendors, The Better To Take On Amazon

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Retail giant Walmart Inc. is testing a service that will store and ship products for third-party vendors, something that mega-retailer Amazon has done for over a decade. Currently Walmart only uses its vast logistics infrastructure to supply its own stores.

Distribution center

The move by Walmart would not only allow it to compete for online sales against Amazon, it would generate revenue from Walmart's e-commerce operations, helping the company stem losses from that part of its business.

Walmart's e-commerce losses might be as much as $1.7B this year, Bloomberg reports, citing Morgan Stanley estimates.

Walmart's U.S. E-commerce CEO Marc Lore said at the Code Commerce 2019 conference last week that the fee-based service, called Fulfilled by Walmart, was being tested, but he didn't offer details about the location of the test or any timetable for its expansion.

As of 2017, there were 173 Walmart and Sam's Club distribution centers nationwide, totaling about 125.8M SF, according to MWPVL International.

Shipping other merchants' goods for a fee isn't the only new logistical strategy that Walmart is rolling out. Also last week, the company announced plans to expand its Delivery Unlimited — a grocery delivery membership option for customers — to 1,400 stores later this fall.

The program gives customers the option to pay an annual $98 fee or a monthly $12.95 fee to receive unlimited same-day grocery delivery orders. Customers will still have the option to pay a per-delivery fee, without a membership.

The retail giant began piloting Delivery Unlimited in four markets – Houston, Miami, Salt Lake City and Tampa – earlier this year. Based on the positive response of customers, the company decided to expand the program to all 200 metro areas where grocery delivery is available today.

The subscription model is Walmart borrowing yet another page from Amazon, the better to compete with that online retailer.

"Consumers have already shown that they are up for this kind of subscription service. Amazon Prime trained us to pay a fee for its free shipping and other services years ago," Kizer & Bender consumer anthropologist Georganne Bender wrote on RetailWire.