Amazon’s speed and “low cost, always in stock” mentality is turbocharging innovation
is obsessed with the freshness of strawberries. Walmart’s top supply-chain executive in America is overhauling the retail giant’s distribution system, and in his mind speed is paramount. Strawberries have only 12.2 days of life after picking, he reckons, and the firm did not always get them to stores fast enough. The radical changes he is introducing can sometimes cut three to four days out of their journey to the store.
Upstream, the firm is investing in technologies that he hopes will allow it to track individual stock-keeping units through the supply chain. Its warehouses are introducing automatic storage and retrieval systems and autonomous vehicles . In July the firm will open an automated facility in California that will handle three times the volume of ordinary ones.
On May 1st Walmart implemented a new policy under which suppliers must meet tougher “On Time, In Full” targets for deliveries of stock or else suffer hefty fines. On June 7th it unveiled a new service that allows customers who order groceries online to have them delivered directly into their fridge.500 list feel such need for speed? A Walmart executive explains: “A competitor who will remain nameless…is forcing all of us to think differently, and we should.
Now the race is hotting up. In April Amazon announced plans to spend $800m upgrading its supply-chain infrastructure in the second quarter to speed up free delivery worldwide, from two days to one. In May Walmart fired back. It unveiled free one-day delivery on over 200,000 items in its online store for orders over $35. It expects the service, which requires no membership, to be available in most of the United States by the end of this year. It will spend over $200m on infrastructure.
Not far from the China Post warehouse is the headquarters of Alibaba, the world’s biggest e-commerce firm by transaction volume. On its leafy campus is an outlet of Hema Xiansheng, a chain in which it has a stake. It looks like a conventional supermarket, albeit with an unusually large selection of Maine lobsters. On closer inspection, many shoppers appear to be leaving without proffering cash, card or mobile payment. Bags of groceries whizz by on an overhead conveyor system.
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