There is a subtle, but important, reveal in the article “The math is looking good for Walmart's automated warehouses” from Business Insider, June 13, 2024.

Excerpts from the article (and my “read” on the excerpts):

“As Walmart's distribution-center and fulfillment-center capacity increases, it's starting to exceed the inventory Walmart actually owns, Rainey said.” [John Rainey, CFO]

My read: This is strategic, not inadvertent. Walmart is proactively creating and allocating an increasing portion of distribution-center space to Walmart Marketplace.

Walmart Marketplace, like Fulfillment by Amazon (FBA), enables qualified third parties to list/sell products on walmart.com. Marketplace orders are fulfilled by Walmart via Walmart’s warehouse/distribution network.

"It gives us the opportunity to use that space for our third-party providers," the CFO [John Rainey] said. "A very exciting part of what's changed in our business over the recent quarters is the number of three-P sellers that are availing themselves of Walmart fulfillment services."

My read: The increase in third-party providers (three-P sellers) relationships on Walmart Marketplace is also strategic. Walmart is aggressively cultivating third-party provider relationships.

“The cost of picking is coming down, the density of last-mile delivery has improved, so therefore the cost per unit continues to fall."

My read: The cost of picking is down because of increased automation of Walmart’s distribution-centers. The density (number of deliveries and items per delivery) of the last mile has improved because of increasing sales volume on walmart.com (including Marketplace items). The last mile is a significant portion (often more than 50%) of the total transportation cost of ecommerce.

My overarching takeaway (speculation on my part) is that a key strategic objective in Walmart’s near and long-term strategic plan is to significantly increase third-party provider relationships. This signals to me that Walmart is preparing to aggressively challenge Amazon’s dominance in ecommerce. It’s going to be interesting to watch. What do you think?

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