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- [Narrator] Meet Walmart's Alphabot. This robot spends all day picking items for online orders at the company's market fulfillment centers, and it's key to speeding up Walmart's delivery. 95% of its orders can be picked in under 12 minutes. In the shipping war against Amazon and Target, Walmart is leaning into the cutting edge, investing in drone delivery and automated fulfillment centers. - By 2025, 65% of our stores will be serviced by automation. - [Narrator] Here's how the country's biggest retailer is going high tech to deliver on more than just speed. This market fulfillment center or MFC is attached to a Walmart Supercenter more than six times its size. Of all the company's e-commerce fulfillment methods, MFCs have the smallest footprint. - Walmart is the largest grocer in the country. They have added many more different ways to get delivery, often using groceries as sort of a linchpin, so that was a big evolution when they started to think of their online business as really a grocery business. - [Narrator] In the back of the MFC, this structure holds 6,000 to 8,000 of the most popular products sold in this area. - Our automated market fulfillment centers separate the inventory from the goods that customers are shopping on the store floor. These are appended to our back rooms or appended to our supercenters. That separate inventory reduces congestion, and the machine-level accuracy ensures that we're picking the right items at the right times for our customers. - [Narrator] Order fulfillment starts here where items are scanned into the Alphabot system. - We have about 175 bots traversing this system. The bots move laterally, horizontally, and vertically to retrieve customers' goods. - [Narrator] Each robot can carry a single milk crate-size bin that can hold anything from minced garlic to 24-packs of soda. When the system receives your order, robots begin bringing your items one bin at a time to this picking station. At the same time, other robots carry these empty bins for the items to be collected in. These lights show the associate which items to take and where to put it. - Instead of a user picking a product and then walking, walking, walking to that next product, one piece of automation could bring that product to the picker, so it does allow opportunities to speed up through the picking and packing process, which inherently drives accelerated shipping. - [Narrator] When all the items in your order have been collected, the bins get dispensed here where they're scanned and labeled. The crates get pushed a few hundred feet away. Here bins from room temperature, fridge, and frozen picking are consolidated so that a customer's entire order is in one place. Any items that were handpicked from the store shelves are also brought here. Now, orders can be picked up by customers in person, delivered by a Walmart driver, or in limited locations, dropped off by drone, often within hours. All of these options are available because the facility is attached to a store that's already close to the customer. Like Target, Walmart has a huge built-in advantage when it comes to faster delivery, a web of more than 4,600 stores across the US alone. More than 4,000 of those stores offer same-day delivery directly from those locations. Target, on the other hand, is building a network of facilities that would relieve local stores of sorting and delivery duties. - Our stores provide a great advantage when it comes to fast delivery because they're located within 10 miles of 90% of the population. - A few years ago, Walmart made a massive shift to using most of its stores to fulfill e-commerce orders. They're trying to kind of control more of it than they would have in the past and find ways to kinda use all the stores that they already have instead of spending more money, and it's very expensive to build e-commerce fulfillment centers. - [Narrator] But most stores weren't originally built to handle both physical and online shopping. - You may ship product from a store that a customer in that retail store actually wanted or went specifically to purchase, and so you may be disrupting that in-store shopping experience. - We're making substantial investments upstream in our distribution centers to ensure that we can get the right items at the right time at our stores. We are also making significant investments in the digitization of our supply chain. We're utilizing AI and ML algorithms to improve forecasting, as well as improve placement of inventory in our stores and our fulfillment centers. - They wanna basically build a mini version of something that is specifically to fulfill online orders so they can do it fast. They can have a higher quantity of orders that move through stores. - [Narrator] Walmart now has seven of these facilities with plans to open over 100 more in the next few years. But investing in MFCs doesn't mean the company is abandoning the traditional e-commerce distribution model that relies on huge dedicated warehouses. Walmart is also investing in five large facilities that it calls next generation fulfillment centers. Three have already opened. At 1.5 million square feet, these centers are fully automated. - Our next generation FCs, coupled with our legacy FCs, can access 95% of the US population with next day or two day delivery. - They're gonna see what we as shoppers like and gravitate to and what they can afford, what makes it a little bit more profitable. - Customers are willing to change brands if they're able to get their product much faster, and that race for speed is really being driven by a number of factors, including fragmentation of retail base. You're seeing more and more startup companies being able to compete with traditional retailers. They're able to provide that next-day service to customers, and that's really driving expectations for many other retailers and their customers. - [Narrator] As e-commerce becomes a bigger and bigger share of overall retail sales. - Walmart is experimenting with lots of things and hoping that some of them stick. We're kind of back to 2019 in retail. A lot of weird things that happened during COVID that impacted the business. Now they have to get back to competing head on for every dollar. - Speed is important within this space, but what's also important is being time-definite. We don't always ship things as fast as we can send them. Sometimes customers want to have items delivered at a specific time, and we aim to meet customers the way they want to be met. - E-commerce delivery, especially small little items to your doorstep in any form is not necessarily profitable. Walmart is trying to take a somewhat similar approach to Amazon, which uses advertising dollars or cloud computing profits to offset the cost of fast delivery. - [Narrator] Customers also pay for some of that cost. Walmart+ members pay $98 annually for free shipping with fees for delivery within hours. But one of the most important cost savers could be Walmart's investment in automation. - What's sort of striking is that as Walmart rolls out automation, it will change what a warehouse job or retail job is in America because Walmart's the largest private employer in the country. Some of the workers that I talked to that have transitioned to these new roles said that their coworkers who haven't made the leap are sort of, in some cases, afraid of the technology. It's such a different job, they just don't necessarily feel comfortable with it yet. - [Narrator] But Walmart says it's not shrinking its workforce overall. - As we've talked to our associates, we talk about how work is going to look different. Today they may walk anywhere from eight to ten miles a day, lift hundreds of items or move cases, driving powered industrial equipment. In the future, our associates are going to operate, be cell operators. They're going to be maintenance technicians. These are the roles that will require them to use their problem solving skills, their creativity. - [Narrator] All of that automation is being implemented in the pursuit of undamaged packages delivered exactly when customers want. - To deliver the perfect order, we're investing in digitizing our end-to-end supply chain to ensure that we have the right items in the right locations at the right time. We're investing in automation so that we can have right-sized packages, so that we can have fully curbside recyclable orders, and so that we can have the level of precision required to ensure that orders are fully accurate when they arrive on customers' doorsteps. - Walmart still has a long way to go in terms of catching up with Amazon on e-commerce, but they're a bigger company than Amazon, and Amazon hasn't quite figured out stores yet, so they're actually competing in interesting ways on multiple fronts. - [Narrator] In our final episode, it's all about you, the customer, and your experiences. (upbeat music)