Walmart opens its 2nd in-store fulfillment center

Walmart on Monday opened its second Market Fulfillment Center, an in-store warehouse designed to increase the number of digital orders the retailer can complete each day. It’s part of Walmart’s ongoing strategic shift toward automation and the use of its existing stores as fulfillment centers.

The newest Market Fulfillment Center (MFC) is located in Walmart’s hometown of Bentonville, Arkansas, joining a 20,000-square-foot warehouse that debuted in Salem, New Hampshire, in late 2019. Walmart did not say how many MFCs it plans to open but said they are in the pipeline for “select stores” in the years to come.

Walmart describes the MFC as a “compact, modular warehouse built within, or added to, a store.” The warehouses can hold thousands of the retailer’s most-popular items, from food to electronics.

“The new order fulfillment system is truly game changing,” Ryan Simpson, manager of the Arkansas Walmart where the new MFC is located, said in a statement. “Not only does it enhance the customer experience through quicker, more accurate online order fulfillment, it also provides us the runway to continue growing our business now and in the future.”

MFCs will “significantly increase” the number of orders a store can fulfill each day, completing them faster and with fewer substitutions, Walmart said. Plus, the retailer noted, store employees will now have more time to assist in-store shoppers.

The MFCs are powered by Alphabot, a proprietary storage and retrieval system that was developed for Walmart by Alert Innovation. (Walmart acquired the robotics automation firm last October.) Alphabot uses autonomous carts to retrieve products from the warehouse and delivers them to a workstation. From there, a Walmart employee checks, bags and delivers the order.

The bots operate on three axes of motion, Walmart previously said, and provide real-time data sharing that can make grocery substitutions easier to anticipate and fill.

“We never want to be in a position to tell an online grocery customer they can’t have an item,” Brian Roth, senior manager of pickup automation and digital operations for Walmart, said in a company blog post in 2020. “We’ll be able to look at datasets and fairly say ‘these two brands of pasta are typically bought together,’ or ‘here’s an item a consumer buys often,’ and use that information to make more informed substitutions.”

The high-tech operation offers new leadership opportunities in-store, Walmart said, including the newly created role of MFC Lead.

Inside Walmart's Market Fulfillment Center. / Photo courtesy: Walmart

In April, Walmart told investors that it is investing heavily in automation, with plans to have about 65% of its stores serviced by automation by the end of 2026 and about 55% of fulfillment center volume passing though automated facilities. Doing so will boost unit cost averages by about 20%, Walmart said.

In addition to MFCs, Walmart operates an omnichannel supply-chain network that includes distribution centers, e-commerce fulfillment centers, consolidation centers and other facilities.

Walmart’s MFC strategy mirrors Target’s longtime “stores-as-hubs” supply-chain model, in which the retailer has transformed its store backrooms into small warehouses where e-commerce orders are picked and packed. But it has found that its stores are getting crowded with packages, slowing down order fulfillment, as Target’s digital sales grew nearly $13 billion during the pandemic.

In February, Target announced a $100 million investment in next-day delivery that includes the construction of at least six “sortation centers.” Target currently operates nine of the facilities, which take order sorting out of store backrooms and into offsite warehouses.

Since the first sortation center opened, Target has reported a 150% increase in the number of orders delivered to shoppers the next day. This year, Target expects to deliver 50 million packages from sortation centers, double the number in 2022.