Walmart’s Next CEO: Sub-One-Hour Delivery ‘Our Fastest Growth Channel’

WMT

As Walmart hands the reins of the company to a new chief exec in February, the retail giant has remained relentless in maintaining high e-commerce growth via accelerating delivery speeds.

Having touted its faster shipping times for multiple years now, Walmart says deliveries made in three hours or less have grown a whopping 70 percent from the year prior.

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“Our fastest growth channel is sub-one-hour,” said John Furner, Walmart’s CEO-in-waiting, during the company’s earnings call Thursday morning. “That is holding up, and it is growing at a fast pace.”

As stores play a larger role in Walmart’s fulfillment operations, its expedited delivery services have been a boon for its online operation. In the third quarter, e-commerce sales grew 28 percent year over year, ticking up from 26 percent annual growth in the prior quarter. In total, e-commerce has grown above 20 percent for seven straight quarters.

Similar to the second quarter, store-fulfilled delivery increased 50 percent from the year prior, while 35 percent of those orders were delivered within the three-hour time frame.

Automation has been a staple of Walmart’s e-commerce growth for shipments coming from fulfillment centers. Several robotics implementations across the warehouses have knock down shipping costs consistently “in the 30 percent range,” according to Walmart’s chief financial officer, John David Rainey.

Walmart is currently retrofitting 42 regional distribution centers with automation technology, with those plans set for a 2030 completion date. This is on top of the four “next-gen” distribution centers operating across Illinois, Indiana, Texas and Pennsylvania since 2023. A fifth location is planned to open in Stockton, Calif. in 2026.

In Walmart U.S., more than 60 percent of stores are now receiving some freight from automated distribution centers, said Rainey.

More than 50 percent of its e-commerce fulfillment center volume is now automated, up from 45 percent last year, “which is driving better unit productivity and helping to lower the cost to serve,” he said.

The moves have shown the Bentonville, Ark. behemoth’s willingness to take the fight to e-commerce giant Amazon in the delivery arena. Amazon itself has touted three-hour delivery capabilities in select cities, and has been made it a point to cut down its supply chain lead times and costs since CEO Andy Jassy took the helm in 2021.

Over the summer, Amazon said 30 percent more items are delivered within the same or next day compared to the year prior.

That battle between the two titans has now reached another front where Amazon has held a huge lead.

Walmart’s deliveries have gotten so fast that they are generating more subscribers to its Walmart+ program.

According to the company, Walmart+ membership income has continued to grow at a double-digit pace, with overall third quarter net adds being the retailer’s strongest on record.

Of the growth drivers, Furner highlighted delivery speed as the primary catalyst, saying that net promoter scores across delivery and shipping are “the highest we have seen.”

The retail giant has not revealed how many members are part of its subscription program, but estimates from Consumer Intelligence Research Partners indicate that Walmart+ had 25 million U.S. members as of the April 2025 quarter. Comparatively, its closest competitor Amazon Prime had 196 million U.S. members, the research firm said.

The company is seeking to reel in more long-term shoppers with the program, especially as consumer spending concerns across an uncertain economy loom large. Ahead of Black Friday, Walmart cut the price of an annual Walmart+ membership by 50 percent to $49 per year, with the offering lasting through Dec. 2.

Walmart+’s membership perks include unlimited free delivery, as well as free returns from home.

Walmart’s supply chain ambitions have come in lockstep with that of its top mass merchant rival, Target.

Target, which is undergoing a CEO change of its own, is tinkering its fulfillment strategies in select Chicago-area stores to further understand how each location is best suited to fulfill online orders based on foot traffic and storage capacity.

“For those stores with high-foot-traffic volume, we’re reducing their mix of brown box fulfillment, allowing those teams to spend more time interacting with in-store guests,” said incoming CEO Michael Fiddelke. “For lower-volume stores in the same market with big back rooms that are perfectly suited to ship product, we’re pushing more digital fulfillment volume their way.”

Fiddelke said the strategy has reduced average fulfillment costs at the pilot locations.

Target plans to expand the findings from the pilot into 35 new markets by next year.

Like Walmart, Target’s same-day delivery numbers keep expanding rapidly. The company saw 35 percent growth in same-day shipping from the year prior. In total, same-day services, including curbside pickup, grew in the mid-single-digits.