Walmart to open high-tech fulfillment centers to ship online orders faster

Walmart is building warehouses with a high-tech spin in hopes of delivering items to customers more quickly and growing its online business.

The retailer said Friday it plans to build four new fulfillment centers that use automation to pack and ship online orders more efficiently, with the first location opening this summer in Illinois. For customers, the new warehouses will mean next-day or two-day delivery could be more common for items including cereal and T-shirts.

The plans come as Walmart competes with online retail giant Amazon, which has made it easy for customers with Prime memberships to order a wide range of items and have them delivered within a day or so. With more of Walmart’s sales coming from its website in recent years, it already has 31 facilities that prepare online orders. More than 3,500 of its stores, or about 75% of its locations, also fulfill online orders.

But at Walmart’s existing fulfillment centers, employees can walk nine miles or more a day to pluck items off shelves and lug them back to areas for packaging, said Michael Prince, Walmart’s vice president of supply chain innovation and automation.

That won’t be necessary at the new warehouses, where an automated system will retrieve items from an expanded storage space and shuttle it to an area where an employee packs it in a box, which will be custom made to fit the order’s measurements. Walmart tested the concept at a fulfillment center in Pedricktown, New Jersey.

Amazon, Kroger and others have also tapped automation to expand capacity and speed. A decade ago, Amazon acquired Kiva Systems, which created wheeled robots for its warehouses. It has tested robots to reduce strenuous jobs for workers and in April launched a $1 billion fund to invest in companies developing supply chain technologies.

Last year, Kroger began opening giant robot-powered fulfillment centers in the U.S. through a partnership with British online grocer Ocado.

Walmart’s first new fulfilment center will open in Joliet, Illinois, about 40 miles southwest of Chicago, and ship to customers across Illinois, Indiana and Wisconsin. Three more will follow in McCordsville, Indiana; Lancaster, Texas; and Greencastle, Pennsylvania in the next three years, the company said.

Walmart said it will hire 4,000 people to work at the new facilities. The current starting pay at existing warehouses is $16 to $28 per hour and wages at the new ones will be at the higher end of that range, the company said. The retailer declined to share construction costs.

Walmart stores will still play a role in the company’s supply chain and handle online orders with popular items along with chilled and frozen groceries, Prince said. Fulfillment centers will handle orders with a broader assortment of products, including pantry staples and other dry groceries.

Other pieces of Walmart’s supply chain are getting a makeover, too. Dozens of stores are becoming mini automated warehouses for online grocery orders. And last week, Walmart said it will add robotics in coming years to its 42 regional distribution centers, which replenish store shelves.