How Walmart Will Manage The Online Holiday Order Spike

Walmart (WMT) is gearing up for the holidays and the consumer demand that is expected to come with it by increasing its e-commerce fulfillment capabilities.

The retailer plans on taking 42 of its regional distribution centers and adding what it called “pop-up” e-commerce distribution centers, where it will handle the growing demand of online orders from its website.

The pop-up sites are expected to move about 30% of Walmart’s online volume during the holiday season, The Wall Street Journal reported. The pop-up centers will also help Walmart reduce its transportation costs as it eliminates shipping from its large fulfillment centers through carriers such as UPS and FedEx, WSJ said.

The regional distribution centers were primarily used to handle Walmart’s flow of goods directly to stores, but will now add an extra element to manage online orders using new fulfillment technologies. This is designed to increase Walmart’s output and meet the onslaught of holiday purchases that are anticipated in 2020 because of the coronavirus pandemic.

The pop-up e-commerce distribution centers will get more products to consumers quicker without the need to build new facilities, which takes time and money that could bottleneck Walmart’s e-commerce business, especially during the critical holiday shopping season.

Greg Smith, Walmart U.S.’s executive vice president, supply chain, said: “The flexibility to pop-up an eDC (e-commerce distribution center) anytime our supply chain network experiences peak demand allows us to deliver for our customers when they need us the most all the while consistently following the health and safety measures we have had in place for months.”

Consumers are expected to do their holiday shopping online as the pandemic continues to wage on and cases of the virus surge in many parts of the U.S. Many Americans have already made the e-commerce shift as they looked for contactless ways to avoid the spread of the coronavirus at the start of the crisis.

Retailers such as Walmart are preparing for a significant demand online for both Black Friday and Cyber Monday as they urge consumers to shop from home to keep crowds down in their stores. Many retailers are also holding holiday sales throughout the entire month of November to give consumers a longer period of time to shop.

To meet the online demand, Walmart will hire more than 20,000 seasonal workers at its e-commerce facilities, WSJ said.

Shares of Walmart were trading at $148.63 as of 11:32 a.m., up 40 cents or 0.27%.