Walmart Opens ‘Dark Stores’ to Improve Delivery

Walmart Inc. (NYSE: WMT) wants to speed up the pace at which it can deliver to customers who order online. Amazon.com Inc. (NASDAQ: AMZN) keeps warehouses around the country to do the same. The Walmart facilities are called “dark stores” because they are buildings with inventory but no doors for retail shoppers and little hint of their locations.

Bloomberg reports that this move is part of a plan Walmart has used before:

The new dark stores will carry some of the most popular items that shoppers buy, amplifying the reach of existing stores and bigger warehouses that fulfill orders. Walmart operated a handful of similar warehouses during the mid-2010s through the pandemic before closing them.

Walmart already has an advantage over almost all brick-and-mortar retailers in America. It claims that among its 4,700 stores, at least one of them is within 10 miles of 90% of the U.S. population.

Amazon has trumped all other retailers with one- to two-hour delivery on some items, many of which are food. This option has a service fee of as much as $9.95. The option is only offered in a limited number of Zip codes.

While the new dark stores offer proximity to customers, it is unclear that it matters. Walmart isn’t saying. However, faster delivery, even if it is same-day, is a sign of how much is at stake, particularly in its competition with Amazon.

In the most recently reported quarter, Walmart U.S. had revenue of $112.2 billion, which was up 3.2% from the same quarter the year before. Operating income rose 7% to $5.7 billion. That is quite a small operating margin.

Amazon reports its revenue slightly differently. In the most recent quarter, North American revenue was $92.9 billion, or up from $86.3 billion in the same quarters a year ago. Operating income was $5.8 billion, a $5 billion increase.

No other retailers in the United States have revenues close to those of Walmart and Amazon. The dark stores are another sign of how heated the rivalry is.

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