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Wal-Mart to use stores as e-retail supply points to take on Amazon

20 May 2015

Wal-Mart said it would use its large network of stores as distribution points for online growth and would be taking an approach different from Amazon.

According to commentators, if the world's largest bricks and motor retailer was serious about taking on Amazon as it had suggested by testing free shipping club (See: Wal-Mart to test new unlimited shipping service at $50 a year), then it would have to spend more  on big distribution centres and other facilities.

The importance of online growth was underscored by the lacklustre quarter results released yesterday.

After a slight dip in quarterly sales, online revenue grew 17 per cent globally in the first quarter ended 30 April.

However the investment in e-commerce wiped 2 cents off the retailers earning per share which equaled  the cost impact in the quarter of its move to hike wages for entry level workers across the US.

Wal-Mart has plans to establish four large dedicated fulfillment centers to add to the 11 facilities operational already and a dozen conventional distribution centres refitted to help in the online push.

The company plans an investment of $1.2 billion to $1.5 billion on e-commerce this year.

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