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Next-generation network to sharpen distribution

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SAN BRUNO, Calif. — Walmart, which has long been known for the efficiency of the distribution network that serves its brick-and-mortar stores, is leveraging those existing assets as it creates the "next generation fulfillment network" to support its omnichannel retailing model.

Walmart, which has long been known for the efficiency of the distribution network that serves its brick-and-mortar stores, is leveraging those existing assets as it creates the "next generation fulfillment network" to support its omnichannel retailing model.

This new network, dedicated to getting packages out to customers quickly and at the lowest possible cost, is not just based on opening giant distribution centers around the country.

"We do have those," says Michael Bender, Walmart executive vice president and chief operating officer for global e-commerce, who notes that the company has added three dedicated facilities for online orders in the past year alone. "But we also are utilizing the entire Walmart network to fulfill online orders."

Walmart has established smaller e-commerce fulfillment centers within some of its store distribution centers, and the company is using some of its stores to ship orders to consumers as well.

"Over the years we’ve built a logistics and supply chain network that’s second to none," Bender says. "This is just another way that our thinking is evolving about how we utilize existing assets in order to deliver on what our customers are asking for from us."

Bender adds that Walmart’s office in Silicon Valley includes data scientists who have been hired to build algorithms that can help the retailer to get smarter about how it positions and uses its facilities.

"We look at product affinities," he says. "Someone who’s buying diapers is probably also buying wipes, for example, so putting those two items in the same facility is likely to lower costs, because we’re shipping one package instead of two. That helps us to satisfy the customer while keeping costs low, allowing our merchants to keep prices low and drive that price difference that Walmart has always been known for."


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