Wal-Mart Stores Inc. is opening two new distribution centers dedicated to filling online orders, as the world’s largest retailer aims to compete with online juggernaut Amazon.com.
The discounter said Tuesday that one center, which is in Fort Worth, Texas, and employs 275 full-time associates, began shipping orders last week. The other, in Bethlehem, Pa., will ultimately employ more than 350 full-time workers. It’s set to open during the company’s fiscal first quarter of next year.
Combined, the new operations will house hundreds of thousands of items, ranging from toys and electronics to clothing.
The discounter is seeing surging e-commerce business, and is more than doubling the number of items it carries on its website, to 5 million, heading into the crucial holiday shopping season.
Wal-Mart has increased its projection for online sales this year, to $10 billion from $9 billion. Globally, online sales increased 30 percent in the second quarter. However, Wal-Mart’s online sales remain only a sliver of its total revenue of $466.1 billion, excluding membership fees. According to trade publication Internet Retailer, Wal-Mart’s online sales reached $7.7 billion in its latest fiscal year.
In comparison, Amazon.com generated $61 billion in revenue last year, and the online retailer has been adding distribution centers and getting into same-day delivery. Underscoring its confidence in the upcoming holiday season, Amazon on Tuesday announced a 40 percent increase in seasonal hiring at its network of U.S. distribution centers. The online retailer said it will be creating 70,000 full-time seasonal jobs.
Meanwhile, Wal-Mart announced last week that it plans to add 55,000 seasonal jobs and is elevating 70,000 more to part or full-time positions as the holiday season ramps up. Last holiday season, the discounter hired 50,000 seasonal workers.
Joel Anderson, president and CEO of Walmart.com, says the combination of its more than 4,000 stores and distribution centers lets the discounter get more products to its customers more quickly and cheaply than in the past. Wal-Mart says it has sped up online delivery by 15 percent, while reducing costs by 10 percent in the past two years.
That has been achieved by algorithms developed by the company’s Walmart Labs, its technology hub in San Bruno, Calif., that determines the most efficient way of shipping based on customer location and items ordered.
Wal-Mart, which is based in Bentonville, Ark., operates more than 130 distribution centers. Many of those handle both in-store and online orders. About 35 of its U.S. stores are being used to ship products directly to online shoppers. And the company offers customers the ability to buy online and then pick up the order in a local store as soon as the same day.