With hundreds of stores spread throughout the United States, Walmart (NYSE:WMT) and Target (NYSE:TGT) have a competitive advantage over many other retailers in distribution, getting packages to customers quickly and inexpensively. It’s a big factor in enabling them to mostly keep up with Amazon‘s (NASDAQ:AMZN) Prime Shipping benefit without requiring memberships.
But Amazon’s quickly catching up to the two companies’ cost advantages, building out hundreds of new fulfillment centers and delivery stations to get customers their items just as quickly as ever, but at less cost to Amazon.
The Walmart and Target store advantage
Walmart and Target run trucks full of inventory all around the country to stock their stores. The retailers take in inventory, put it in their warehouses, and regularly replenish store stocks from there. Fully controlling this distribution to get items close to customers (i.e. in stores) cuts costs for the big-box retailers.
Target has been aggressive in using its stores, instead of dedicated warehouses, to fulfill online orders. Last quarter, Target fulfilled more than 75% of online orders through its stores by either shipping from the backroom or having customers pick up orders at a nearby location.
Walmart hasn’t been as quick as Target to adopt that model, but Walmart accelerated its ship-from-store efforts this year as the COVID-19 pandemic led to a surge in online orders. About 2,500 of its stores are now Source…