Walmart Inc. (NYSE:WMT) said it will place pop-up e-commerce distribution centers inside 42 of its U.S. Regional Distribution Centers (RDCs) in a move to create more dedicated space to fulfill and deliver an expected mountain of online orders.
The Bentonville, Arkansas-based retail giant forecast that he pop-up stores will be responsible for handling 30% of its peak e-commerce volumes. RDCs traditionally ship pallets of goods to retail stores, a distribution process that’s much different than facilities designed to pick, pack and deliver parcels to individual residences.
Walmart currently has 25 e-commerce facilities dedicated to direct-to-consumer fulfillment and delivery, according to data from MWPVL, a consultancy. However, the company operates an additional 20 e-commerce locations that support other segments of its far-flung operations, MWPVL said.
In an internal blog post last Thursday, Greg Smith, executive vice president-supply chain for Walmart’s U.S. division, said the initiative will strengthen the company’s e-commerce delivery resources without the cost and delays of building separate stand-alone facilities.
The pop-up centers will remain in operation after the peak period ends, and will flex up and down depending on the cyclical need, the company said.
The 2020 peak season will be unprecedented as seasonal demand converges with another ferocious cycle of COVID-19 infections in the U.S. More than 7 million parcels per day may go undelivered during the peak because demand is expected to far exceed the capabilities of fulfillment and delivery providers, according to ShipMatrix, a consultancy. Distribution and fulfillment space is also expected to be at a premium.
On the surface, one benefit of the Walmart program is that it leverages the company’s existing DC capacity. The company has also modified its IT infrastructure to equip the RDCs with the ability to manage e-commerce orders as well as traditional bulk orders to its stores. For example, Walmart’s Multi-Channel Sourcing Engine can, in less than one second, scan its entire fulfillment network to assign orders to e-DCs that offer the fastest and most efficient option to fulfill an order, Walmart said.