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Walmart is expanding its online grocery delivery service to more than 100 metro areas across the US.

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JD.com has raised US$2.5bn for its logistics subsidiary, in order to invest in new automation technologies.

Investing in new technologies

The online retailer has entered into definitive agreements for the financing of its logistics subsidiary, JD Logistics. The total amount raised is expected to be around $2.5bn. JD.com will remain the majority shareholder of JD Logistics with an 81.4% stake. JD.com will use the money raised to invest in new technologies to make its supply chain more efficient, including automation, drones and robotics.

An efficient, integrated and user-friendly logistics network

Zhenhui Wang, CEO of JD Logistics, said, “Over the decade that we have built out our operations, initially to support our own e-commerce business, we have created the most efficient, integrated and user-friendly logistics network in China. This financing will enable JD Logistics to further enhance its smart supply chain network with openness and integration. It is a major step, which will speed up our collaborative efforts with leading industry partners and build China’s next-generation commercial infrastructure ecosystem.”

Walmart is set to open a new tech hub in Austin, Texas focused on developing technologies to improve back-end processes, including finance, governance, human relations, employee training and manufacturing.

Driving back of store efficiencies

512 Tech reports that the facility, whose design is reflective of the start-up community, will open later this month. With a focus on developing technology-based solutions to drive back of store efficiencies, the team will optimise emerging technologies including machine learning, artificial intelligence, blockchain and IoT.

Access to a new pool of talent

Jason Norris, Director of Engineering for Walmart Tech ATX, stated the decision to locate in Austin was in part to access the pool of talent in the city. “At Walmart we are really changing the way we work in a lot of ways. Austin is a really unique city in that you have a very deep pool of that talent, but you don’t incur some of those higher costs of living that you do on the West Coast and East Coast.” He expects to the team to grow from 13 to 60 people over the next six months.

Looking to emulate success of Walmart Labs

This approach reflects how Walmart established Walmart Labs in 2011. This unit, which was initially developed following an acquisition, went on to acquire more than 15 other companies with the goal of advancing Walmart.com with a focus on social, mobile and local. This has evolved over the last seven years and currently includes Walmart Ecommerce and store technology teams. The focus is on creating the world’s leading retail platform to enable the most seamless customer experience, increasing operating efficiencies while decreasing enterprise expenses and ensuring that store and corporate associates have access to secure digital solutions.

Complements Store No.8’s store focus

While the new unit in Austin will focus on back-end efficiencies, last year Walmart established Store No.8 to assess the opportunities for innovative technologies such as virtual reality, artificial intelligence and driverless vehicles within the retail environment. Earlier this month, it acquired VR platform and content studio, Spatialand, which will create the foundation of the incubator’s third portfolio company behind Code Eight and Project Franklin.

Bridging the gap with the future Walmart

Setting up these tech-led units demonstrates how Walmart is looking at the opportunities for the business over the longer term. While it is currently building its ecommerce business and reinventing its store formats to ensure their future relevance, these three divisions will help it to bridge the gap between its legacy store business and the next three to five years while driving further efficiencies within the organisation.

Walmart has announced new plans to introduce stricter supplier delivery regulations to boost availability in stores.

Delivery on time or face a fine

Under Walmart’s new scheme, suppliers will be required to deliver more products on time to its facilities or be faced with a fine. Steve Bratspies, Walmart Chief Merchandising Officer, has revealed that large suppliers will have to deliver full orders within a specified one or two day window 85% of the time (previously 75%), or be fined 3% of the delayed goods. Smaller suppliers will need to meet the criteria 50% of the time, up from 33%. In 2017, the retailer revealed that its goal was for orders to be delivered on time 95% of the time.

Working with suppliers to improve availability

In order to further improve availability and lower inventory, Walmart will also share its On Shelf Customer Availability (OSCA) data with suppliers at its Supplier Growth Forum this week, something which was previously only available internally.

Making significant progress

“We have reduced inventory in stores in order to have the right amount of stock and have made significant progress in the past few years,” commented Steve Bratspies, chief merchandising officer at Walmart U.S., told Reuters. “We want to focus on improving that even more.”

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