Walmart, the world's largest brick-and-mortar retailer, has launched an experiment to use spare back-room space at its stores as inventory hubs for third-party sellers on its online marketplace. The strategy extends the fulfillment role of physical stores into a warehousing function for outside merchants, challenging Amazon's delivery prowess. It stands in stark contrast to the situation in South Korea, where hypermarkets are barred by regulation — including late-night operating curbs — from leveraging urban stores as logistics infrastructure.
According to the Financial Times, Walmart recently began a pilot program at select stores in Dallas, Texas, stocking third-party sellers' goods in back-room space and offering same-day delivery. Walmart Marketplace is an online platform where outside sellers list products alongside items Walmart itself purchases and holds. Until now, Walmart has used its stores as fulfillment centers for online orders, but the merchandise shipped was mostly its own. The pilot reflects an effort to dispatch third-party sellers' products from stores as well, taking advantage of the extra space freed up in recent years through warehouse automation and more efficient store-level inventory management.
The experiment aims to narrow the delivery-speed gap between Walmart's own goods and third-party products. More than a third of e-commerce orders shipped from Walmart stores are currently delivered within three hours on the same day. But that speed applies only to items Walmart owns directly. Third-party goods are stored in separate Walmart-owned warehouses and typically take one to two days to arrive. Shipments sent directly by sellers are even slower. From the shopper's perspective, delivery speeds can differ sharply for orders placed through the same Walmart app, depending on whether the item is a Walmart product or a third-party listing. Pre-stocking third-party goods in back rooms near customers' homes is the key to closing that gap.
Walmart expects that expanding such use of its stores will help narrow its delivery-competitiveness gap with Amazon. Walmart Marketplace posted $14 billion (about 20 trillion won) in U.S. sales last year, far below Amazon Marketplace's $333 billion (about 485 trillion won). Manish Joneja, senior vice president of Walmart U.S. Marketplace and Fulfillment Services, said, "We're starting to offer some marketplace items through the pickup and delivery services customers already know," adding, "We will expand this store operation based on the know-how gained from the pilot."
While Walmart is testing ways to integrate offline assets with online operations to boost competitiveness, South Korea's hypermarket chains are hemmed in by regulations that make similar strategies difficult to pursue. Store-based shipping and delivery services are subject to the mandatory closing days and operating-hour restrictions imposed by the Distribution Industry Development Act. That means stores cannot dispatch goods, let alone sell them, outside business hours. Even during daytime operating hours, stores must close twice a month, making continuous service impossible. Hundreds of hypermarket outlets nationwide could each serve as an urban logistics center, but regulation prevents them from doing so.
The Presidential Office, the government and the ruling Democratic Party officially announced plans to push for revisions to the Distribution Industry Development Act at a high-level meeting at the prime minister's residence in Samcheong-dong, Seoul, on Feb. 8, but discussions have since stalled. The ruling party is seen as slowing the pace amid fierce opposition from small-business groups.
Small merchants argue that including fresh food in early-morning delivery would inevitably hurt neighborhood shops. The industry counters that excluding fresh food would render any deregulation meaningless. "The government agrees on the need for deregulation but appears to be putting off a decision as the local elections approach," an industry official said. "Related regulations must be eased quickly to contribute to the development of the domestic distribution industry and expand consumer benefits."
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