Dive Brief:
- Walmart slashed its U.S. net delivery cost per order by 40% in Q3 for the third consecutive quarter, EVP and CFO John David Rainey said in an earnings call Tuesday.
- "There are a few key factors driving this improvement: delivery densification, increased penetration of paid expedited delivery orders and the automation of our supply chain," Rainey said.
- Orders per delivery increased 20% year over year, resulting in more cost-efficient and productive driver routes. Walmart is also handling more than 50% of its fulfillment center volume with automation, twice as much as a year ago, Rainey said.
Dive Insight:
Walmart has made steady progress in reducing its last-mile delivery costs this year as it grows its online shopper base, helping the retailer spread out expenses among more customers.
Store-fulfilled delivery sales for the company jumped nearly 50% year over year in Q3 and surpassed a $2.5-billion monthly run rate, Rainey said.
"We've now had 12 consecutive months of deliveries above $2 billion," he added.
The sales growth comes as Walmart has expanded its roster of U.S. stores that offer delivery from 4,200 in Q3 of last year to 4,500, according to an earnings presentation.
While Walmart is pushing for more efficient delivery operations from these stores, it's not looking to sacrifice speed in the process. More than 30% of store-fulfilled deliveries are coming from customers who paid more to have their items in less than 3 hours, or even within the hour, according to Rainey.
"If investments in delivery speed cause us to reach profitability a little later, that's fine too," Rainey said of the company's e-commerce business. "We want to deliver faster. So I think we are very confident that we're going to make money in e-commerce."
Fast delivery is a priority for Walmart amid its growing competition with Amazon. President and CEO Doug McMillon said in May that Walmart delivered 4.4 billion items with either same-day or next-day shipping speeds in the U.S. in the prior 12 months. While McMillon didn't provide an update on the stat in Tuesday's call, he did say delivery speeds are "becoming increasingly important to customers."
