Walmart and Amazon are widely recognized as two of the most significant players in the retail industry, particularly in e-commerce. As the market evolves, companies invest heavily in automation and artificial intelligence (AI) to strengthen their fulfillment systems. Walmart’s automation strategy involves opening four new, heavily automated fulfillment centers by 2024. In contrast, Amazon has deployed over 520,000 warehouse robots across more than 1,200 fulfillment centers worldwide, supported by a more advanced AI infrastructure.
Walmart’s Automation Strategy
According to MarketGap Pro, Walmart has been making significant investments in its automation strategy to enhance its supply chain capabilities and compete with services like Fulfillment by Amazon. One notable development includes acquiring Alert Innovation, a robotics automation company specializing in retail supply chain automation. This acquisition has strengthened Walmart’s Market Fulfillment Center (MFC) technology since 2016.
A crucial aspect of Walmart’s automation strategy is the expansion of high-tech MFCs and building automated fulfillment centers (AFCs). The company plans to open four new AFCs that rely heavily on automation by 2024. These centers streamline order fulfillment, making it faster more efficient, and improving the customer experience.
Walmart’s partnership with Symbotic highlights its commitment to implementing innovative technology within its regional distribution centers (RDCs). Walmart aims to incorporate Symbiotics’s automation system in 25 of its 42 RDCs, fundamentally altering how products reach stores and improving supply chain operations.
Some key features of Walmart’s automation strategy are
- Robotics to assist in material handling and order picking
- Advanced conveyor systems for efficient product movement
- Automated guided vehicles for transporting items
- Real-time tracking and monitoring of inventory
Understanding Fulfillment by Amazon
Fulfillment by Amazon (FBA) is a service offered by Amazon that allows sellers to store their products in Amazon’s warehouses. This service takes inventory management, storage, packaging, and shipping on behalf of the seller. In this section, we will delve into the key aspects of FBA, its benefits, and how it compares to other fulfillment services.
One of the main advantages of using FBA is that it provides sellers with access to Amazon’s vast customer base and delivery network. This means that sellers can reach more potential customers, which in turn can lead to increased sales. Furthermore, Amazon handles customer service and returns for these orders, taking some of the burden off the seller.
FBA’s fees vary depending on the size and weight of the product, as well as the time of the year.
Here’s a quick comparison between FBA and competing Walmart Fulfillment Services (WFS):
- Inventory management: FBA requires sellers to ship inventory to multiple fulfillment centers, while Walmart sellers only need to ship to one center.
- International shipments: FBA handles international shipments, while WFS focuses on U.S.-based shipments.
- Product dimensions: FBA accepts products of all sizes, while WFS imposes product dimensions and weight restrictions.
Comparative Analysis: WFS vs. FBA
Walmart Fulfillment Services (WFS) and Fulfillment by Amazon (FBA) are prominent players in e-commerce logistics. To understand their differences, it’s vital to consider several factors, including seller competition, logistics capabilities, fees, and product acceptability.
In terms of seller competition, Walmart has fewer sellers than Amazon. With only about 30,000 sellers, Walmart offers a more favorable buyer-to-seller ratio than Amazon, with over 3 million sellers competing for users’ attention. This dominance in the market gives Walmart sellers a higher chance of obtaining a spot in the coveted Buy Box, being less crowded.
WFS and FBA are known for their logistical prowess, providing quick turnaround times for order fulfillment. The two platforms use advanced supply chains to offer picking, packing, shipping, and delivery services. However, it’s important to note that FBA accepts international shipments, while WFS only caters to shipments within the U.S.
WFS has stricter limitations regarding product sizes and weights than FBA. While FBA has more flexible guidelines for listing items of all sizes, WFS restricts stocks based on dimensions and weight. This restriction could influence the range of products sellers offer on each platform.
The Role of AI in Fulfillment Services
AI technology has become a significant part of Walmart and Amazon’s fulfillment services, allowing for increased efficiency, scalability, and better customer experience.
In the case of Walmart, AI innovations are incorporated into their supply chain strategies, such as Market Fulfillment Centers (MFCs) and inventory management. To support automation and smooth operations, Walmart Global Technology has developed a platform called Walmart Control Services, enabling rapid integration of automated solutions from partners like Knapp, Symbotic, and Witron.
Machine learning algorithms aid Walmart’s MFCs by predicting product demand and optimizing storage and retrieval operations. Recently, Walmart agreed to acquire Alert Innovation, a robotics automation company specializing in retail supply chain automation. It demonstrates Walmart’s commitment to staying at the forefront of AI-driven automation services.
AI-driven advancements have influenced the Amazon and Walmart platforms in several ways:
- Automating warehouse processes and reducing manual labor.
- Offering dynamic pricing and optimal product placement based on customer purchasing patterns.
- Enhancing customer service through AI-powered chatbots and virtual assistants.
- Streamlining inventory management for suppliers.
Shipping and Delivery
Walmart offers free next-day delivery on orders of $35 or more in 40 of the top 50 US metro areas, ensuring fast shipping of online orders. With Walmart Fulfillment Services (WFS), sellers can offer nationwide 2-day shipping, which may boost the conversion rate by 30% compared to longer shipping windows. In contrast, Amazon’s FBA program is well-known for its fast shipping, giving Prime members access to free 2-day shipping (and sometimes even faster delivery) on eligible products.
Customer Service and Experience
Both Walmart and Amazon strive to provide timely, effective customer service. However, Amazon has the edge in this regard, as they are known for their exceptional customer service and easy return process. They have set a high standard for online shopping platforms. Nevertheless, Walmart is working hard to keep up with Amazon’s high-quality service by investing heavily in technology and automation for their fulfillment centers.
Online Shopping Experience
Walmart and Amazon compete to offer customers seamless online shopping experiences. Amazon dominates this space, with over 2.45 billion monthly visits as of June 2021, becoming the top e-commerce site in the United States. Walmart ranked third with more than 410 million monthly visits, has grown its e-commerce business significantly. By integrating automated systems, Walmart catches up to Amazon to ensure customers have a memorable shopping experience.
E-Commerce Growth and Challenges
Walmart increased its automation efforts to keep up with Amazon’s efficient fulfillment system Walmart bulks up automation to compete against Amazon. By 2024, the company plans to open four new fulfillment centers that rely heavily on automation, making the supply chain more efficient and decreasing delivery times.
Amazon, on the other hand, continues to dominate the e-commerce landscape with over $468 billion in worldwide revenue for 2021 Walmart Is Gaining On Amazon In E-Commerce. Walmart follows in second place, garnering $75 billion in the same period. Both companies have recognized the importance of optimized logistics in an increasingly online market.
The pandemic-driven growth, however, brings challenges in the e-commerce sector. Large-scale logistics operations strain the capabilities of traditional supply chains, requiring the integration of advanced technology and nuanced strategies to maintain competitive delivery times and customer satisfaction.