Walmart has begun testing out mini warehouses closed off to the public to facilitate faster distribution and compete with its rivals in the e-commerce space.

According to a report by Bloomberg, cited sources familiar with the matter, Walmart has already opened one of these “dark stores” in Dallas, Texas, with plans for further distribution centers in the pipeline.

Walmart told Newsweek, “Regardless of the channel, our goal remains the same: to deliver a fast, seamless, and engaging customer experience.”

Why It Matters

The employment of these fulfillment centers could streamline Walmart’s deliveries and allow the company to gain ground on Amazon and others in the fast-growing e-commerce market, projected to reach over $2 trillion in value by 2030, per industry estimates. Walmart has also stated that expanding its national customer reach is a strategic priority, behind both the push for faster deliveries as well as the new store openings announced earlier this year.

What To Know

According to Bloomberg, the new “dark stores” will resemble Walmart’s traditional retail outlets, stock most of its best-selling items, and extend the capabilities of its current stores and distribution centers.

Walmart has tested alternatives to its in-store shopping model for years, such as the opening of “Pickup Point” in 2019 – a 40,000-square-foot store outside Chicago where customers could drive and collect their online orders.

The latest experiment would make Walmart one of many big retailers to remodel warehouses into dark stores, many of which began experimenting with the idea amid the COVID-19 pandemic. Whole Foods opened a closed-off fulfilment center in Brooklyn in 2020, while others, such as supermarket chain Kroger, began experimenting with this “ghost” delivery method, as have several fast-food chains, Forbes reported in 2022.

Expanding its online business and delivery capabilities has long been central to Walmart’s growth strategy. CEO Doug McMillon touched on this during the company’s most recent earnings call, after Walmart announced 2.5 percent growth in revenue for the first quarter and a 22 percent increase in its global e-commerce sales.

“Delivery speed continues to help drive our business,” McMillon said. “We’ll soon reach 95% of the population in the US with delivery options of three hours or less.”

What People Are Saying

A Walmart Spokesperson told Newsweek: “We regularly test new tools, features, and capabilities to better connect with and serve our customers—wherever and however they choose to shop. Regardless of the channel, our goal remains the same: to deliver a fast, seamless, and engaging customer experience.”

Chief Financial Officer John David Rainey, during the company’s recent earnings call, said: “There are a few things that have driven the [first-quarter] performance, notably in the US… one is the densification of our network. And what I mean by that is, we have more customers that are coming to Walmart now and taking advantage of our eCommerce offerings.”

What Happens Next?

Bloomberg reports that Walmart’s next dark store will be in Bentonville, Arkansas.