Ship From Store Technology Could Be Walmart’s Edge in eCommerce Battle

Additional technology investments could allow Walmart to ship goods directly from stores, reducing the time and potential cost of last mile delivery

The continued expansion of eCommerce has put pressure on the in-store sales of many retailers, including Walmart. A recent US Census report showed that eCommerce has grown from 3.5% in 2008 to 9.0% in 2017 [1], and according to a recent UPS / comScore survey, consumers who shop online, now make more than 50% of their purchases over the internet [2]. Some companies have taken advantage of this growth. For example, Amazon has increased its North American retail sales from $16bn to $80bn over the last six years [3].

In this increasingly digital market, Walmart, along with other companies with large store bases, have shown signs of struggle.  However, many in the industry tend to overlook one potential benefit – the option to ship goods directly from stores instead of warehouses. Shipping from stores could lower the time and cost of last mile delivery, as stores are convenient for delivery drivers, closer to consumers, and many have the required inventory. This could allow Walmart to use its 4,741 U.S. stores as a competitive advantage.

For Walmart to create a successful ship from store model, it must make its supply chain more digital. The company must have the ability to accurately complete last mile delivery, improve inventory tracking in each store, streamline the process to pick items from shelves, and develop the analytics to decide when to ship from store instead of from a warehouse.

Recent Initiatives to Digitize the Supply Chain

Walmart has attempted to utilize existing logistics technology required to enable the last mile delivery for ship from store. The company tested using Uber and Lyft for delivery in 2016 [4], and in 2017 piloted using Walmart store employees to make the deliveries with the goal of delivering packages quicker than online competitors could [5]. Additionally, the company recently acquired Parcel, a last mile delivery service primarily in New York, that has technology to coordinate delivery fleets and allows consumers to track their driver and delivery [6].

Walmart has also attempted to address the requirement for better information on in-store inventory. Accurate information on inventory stock and location is essential to minimize pick time and maximize labor utility. In 2003, the company first tested RFID technology that would allow employees to know the exact inventory count and location for each SKU, but it did not go through with the initiative due to cost. Since that time the performance of RFID chips has increased, and the price of a chip has declined by 90% [7].  More retailers have adopted the technology and it appears that it could be a cost-effective solution to tracking the store inventory. The company also partnered with IBM earlier this year to test blockchain tracking for food [8], but this technology is not fully developed yet.

Future Walmart Logistics Investments

Walmart should continue to invest in its supply chain to make ship from store a potential edge as eCommerce sales continue to increase. In addition to the focus on inventory tracking and technology to enable last mile delivery, Walmart needs to develop prescriptive supply chain analytics to automate decision making. Some industry experts such as PWC have suggested that if a company has a fully digitalized supply chain with complete inventory visibility, it could build an analytics system to find an optimal solution for delivery [9]. As Walmart improves visibility on in store inventory the company should simultaneously develop a system that will consolidate data on the inventory, demand and cost inputs. This would allow Walmart to shift its fulfillment decision between traditional warehouse fulfilment and ship from store to optimize for shipping timing and cost.

At the same time, Walmart needs to test and develop internal processes and technology for picking and packing items in store for the ship from store initiative to be successful. The best way to accomplish this would be to test different processes across different stores and share the learnings and best practices that are discovered. This would also be a good way to determine the control mechanisms needed to ensure accuracy and inventory levels prior to rolling it out to all the stores.

Remaining Questions:

What steps should Walmart take to avoid negatively impacting the in-store experience if they fully implement ship from store? And should Walmart continue to pursue addressing this topic with acquisitions (as with the Parcel acquisition) or invest to organically create the required technology?

Word Count: 727


[1] U.S. Census Bureau, Quarterly Retail E-Commerce Sales 2nd Quarter 2017, p.1, accessed November 2017.

[2] Laura Stephens, “Survey Shows Rapid Growth in Online Shopping,” Wall Street Journal, June 8 2016,, accessed November 2017.

[3] Derek Thompson, “What in the World is Causing the Retail Meltdown of 2017?,” The Atlantic, April 10 2017,, accessed November 2017.

[4] Sarah Nassauer, “Wal-Mart to Test Grocery Delivery with Uber and Lyft,” Wall Street Journal, June 8 2016,, accessed November 2017.

[5] Sarah Nassauer, “Wal-Mart Tries Using Store Workers to Deliver Online Orders,” Wall Street Journal, June 1 2017, accessed November 2017.

[6] “Who is Parcel? What this Delivery Company Means to Walmart,” Walmart Corporate Blog (Blog),, October 3, 2017, accessed November 2017.

[7] Barbara Thau, “Is the RFID Retail Revolution Finally Here? A Macy’s Case Study,” Forbes, May 15 2017, accessed November 2017.

[8] Rodger Aitken, “IBM Forges Blockchain Collaboration With Nestlé & Walmart In Global Food Safety,” Forbes, August 22 2017,, accessed November 2017.

[9] Schrauf, S. and P. Berttram, Industry 4.0: How Digitization Makes the Supply Chain More Efficient, Agile, and Customer Focused, PWC Strategy & (2016)


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Student comments on Ship From Store Technology Could Be Walmart’s Edge in eCommerce Battle

  1. Kudos for picking such a fascinating topic Nick! The essay is super engaging and does a great job of getting the reader excited about the future of retail.
    Thoughts on your questions:
    1. There are a couple of options Walmart could try here. First, leveraging advanced analytics, they could attempt to store maximum inventory at the back, in storage and display only the minimum required quantities. This will allow them to reduce display floor space and have bigger space behind the scenes to process and ship online orders. Second, they could try scheduling slots during the day when employees would go around picking orders placed up to that point and drop them off in the back for dispatch. This could be done after-hours too in case same-day delivery is not guaranteed. Third, and least effective measure could be use automation and technology to do picking of orders even for the in-store customers wherein walk in customers browse through a digital catalogue of what they are looking for and their goods are brought to them in a minimalistic front space

    2. Walmart should potentially pursue both the options. Since innovation in this space is not their core, and there would always be innovators who are fully immersed in building these technologies, Walmart could just buy/acquire these companies or technologies. In addition, it could double down its own innovation efforts to complement and complete the acquired technologies to tailor and build as per its requirements

    1. Nick, thanks for putting together this interesting piece. As Kunal points out, your post provides a compelling path for a traditional retailer, such as Walmart, to grow in the digital world.

      Please find below my thoughts on your questions, including reactions to Kunal’s responses.

      1. If Walmart fully implements ship from store, the retailer should be conscientious that this is likely to increase store traffic and negative impact the in-store customer experience. I agree with Kunal that stores could better optimize the floor space and inventory storage by analyzing in-store and delivery demand data. Ideally, delivery orders could be processed fully in the inventory storage section to avoid in-store customers. By contrast, Whole Foods created Instacart-only lines to drive efficiency for the grocery delivery provider; however, these lines can be left empty, frustrate the in-store customers and result in crowding. While I appreciate Kunal’s suggestion of leveraging robots for product selection, this should likely be performed in the inventory storage section because consumers may be scared of the robots.

      2. Traditional incumbents often struggle to attract best-in-class technology talent and pursue an acquisition strategy to effectively hire strong teams. However, over the near term, Walmart should invest to organically develop the required technology. Since acquiring in August 2016, Walmart has acquired at least six other eCommerce businesses, including Parcel, so it needs time to integrate these companies into its system; further acquisitions would add complexity. Moreover, Marc Lore, CEO of Walmart eCommerce, is an extraordinary entrepreneur; he previously founded Quidsi (acquired by Amazon) and and would be the “one person who in the new reality of retail who can stave off all of us living in ‘The Amazon’.” (Seeking Alpha) Because Lore is so well respected in the technology community, he can recruit talented technologists that Walmart (and other incumbents) would be unlikely to attract.

      1. Nick, it seems like Walmart has a good idea on how to make itself competitive with a growing Amazon. This initiative you’ve explained addresses mostly the demand side, that if implemented correctly, customers may eventually prefer to receive Walmart products via delivery than to receive Amazon products. However, I wonder how suppliers would respond. Presumably, Walmart and Amazon have the same suppliers. If they max out their ability to compete on the demand side, I bet they will eventually compete on the supply side. What would supply side competition look like? I have a feeling Amazon will still win because Amazon can afford to offer both the low-end quality goods and the high-end, higher priced goods. Walmart, in order to keep its margins so high, can only source from low-end, low priced suppliers.

  2. Great article Nick! The question of how incumbents are working to avoid being disrupted by new services is a fascinating one. Kunal, Fred and you have already discussed the impact on customers of treating stores as last mile warehouses. Beyond the in-store logistics, one question that arises is that are the existing set of stores optimized to serve as last mile destinations? Current stores have been located for a different set of considerations and merely treating them as warehouses (integrated or separated) may not serve the purpose of building an efficient density of supply centers.

    Secondly, last mile delivery and logistics services in the US have not demonstrated a sound and sustainable business model. Multiple companies have struggled to win this segment and many startups operating in the sector are struggling [1]. This is a sector with its own specific challenges. Walmart may be best served by not trying to develop this capability (by either acquisition or delivery), but rather by independently contracting with existing players to utilize them to service demand.


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