Dive Brief:

• Wal-Mart is partnering with a slew of potential new shipping partners to build a regional delivery network supporting free two-day shipping services, the Wall Street Journal reports. Wal-Mart, which has been piloting an invitation-only $50 per year “Shipping Pass” subscription that garners its members free three-day shipping, will tighten that delivery window by a day and discount the annual fee by a dollar to $49, the report states.

• The Wal-Mart shipping network hinges on eight e-commerce warehouses positioned across the U.S., with construction on the final site scheduled to conclude by the end of 2016. In February, Wal-Mart met with regional delivery companies to solicit bids for the new effort, sources told the Wall Street Journal.

• Although the Wall Street Journal said the delivery network would not involve FedEx, which presently handles the bulk of Wal-Mart's shipping, a Wal-Mart spokesperson told Retail Dive that assertion is inaccurate. "The reality is we’ve always used a broad range of carrier partners—both national and regional—to fulfill online orders to customers and stores, and we’ll continue to do so in the future as we further enhance our fulfillment capabilities," Wal-Mart's Ravi Jariwala said in an email. "To suggest we won’t be using FedEx or other national carriers is incorrect."

Dive Insight:

Wal-Mart has already said that through 2017 it would spend some $2 billion to boost its e-commerce efforts, and with this new shippng effort, the retailer shows that it’s willing to take on Amazon on more than just price, moving into a logistics arena where Amazon has some clear advantages—including scope and scale, which both likely garner Amazon price breaks on fulfillment.

Although it will take time, sources told the Wall Street Journal that Wal-Mart has the potential to scale up relatively quickly. As the country’s largest brick-and-mortar retailer by far, Wal-Mart is able to leverage its vast number of stores as fulfillment hubs, in addition to its 150 distribution centers and eight e-commerce fulfillment centers.

“[Wal-Mart] will build density over time and become increasingly more competitive,” Ivan Hofmann, a former FedEx executive and transportation industry consultant, told the Journal.

But the logistics of e-commerce means lower margins for retailers, and that could be a shift that a bottom-line brick-and-mortar powerhouse like Wal-Mart may not want to make, according to Nick Egelanian, president of retail development consultants SiteWorks International.

“Wal-Mart is the biggest retailer in the world, and their system is selling through bricks and mortar. And they’re efficient,” Egelanian told Retail Dive earlier this year. “We know that Wal-Mart has the most efficient system in the world. We know that they break that product down and put it on the shelves, and they do that very efficiently also, and then they’re done. And selling on the Internet is not efficient. The whole methodology of selling on the Internet is completely foreign to what it’s like selling at a Wal-Mart.”

Wal-Mart also has a habit of abandoning major changes that don’t pay off quickly enough, some experts say.

“As soon as their efforts wouldn’t show fruit, they’ve abandoned it," Columbia University business school retail studies professor Mark Cohen told Retail Dive earlier this year in regards to Wal-Mart's efforts to appeal to wealthier consumers. "It takes two to five years to change the composition of a large store and a large number of stores without losing your core customers and your underlying business. I’ve seen these kinds of initiatives come and go at Wal-Mart, and I have never seen them stick."