Amazon and Walmart are two retail giants that have been leading the way in last-mile delivery solutions. With the rise of e-commerce and the demand for fast, efficient delivery options, both companies implemented strategies that revolutionized the way packages are delivered to consumers. Their last-mile investments helped make them the two leading U.S. retailers.
While it's very difficult to compete with these two retail giants, businesses can lot to learn by examining their tactics and repeating what makes sense. In this article, we’ll look at how businesses can take inspiration from how Amazon and Walmart approach their last-mile operations.
Overview of Amazon and Walmart delivery offering
Amazon, with its Prime membership program, offers free two-day shipping for millions of items, along with same- and one-day delivery options in certain locations. The company also invested heavily in its own delivery network, including drones and autonomous vehicles, to further streamline deliveries.
Walmart, on the other hand, focused on leveraging its vast network of physical stores to fulfill online orders. The company offers free same-day pickup for online orders at its stores alongside its membership-based Walmart+ same-day delivery service.
Amazon accelerated delivery with regionalization
Amazon delivered to Prime members at its fastest speeds ever in 2023, with more than 7 billion items arriving the same or next day—over 4 billion of those in the U.S.
In Q4 of 2023, Amazon increased the number of items delivered in the US by 65% year over year with same-day or overnight delivery.
How was this achieved?
This was achieved through a regionalized fulfillment network that shortened the distance between inventory and customers. By treating the U.S. as eight interconnected regions, Amazon was able to store popular items closer to shoppers, enabling more efficient picking, packing, and delivery. This regional model reduced handoffs, improved route density, and supported same-day fulfillment growth across more than 90 metro areas. The result: faster delivery speeds, greater consistency, and lower costs per package.
Technologically, Amazon deployed AI and machine learning infrastructures and algorithms. This allowed it to analyze customer demand and optimize inventory placement. These implementations also support Amazon’s customer-centric approach which focuses on meeting customer expectations for price points, selection, and delivery speed.
What’s more, Amazon’s tech investment means that 75% of all global customer orders are delivered with the assistance of robots working within its operations.
Walmart's maximized store network
Walmart's store-fulfilled delivery sales increased by 50% in Q4 and achieved a $2 billion monthly run rate. This saved on unit economics by spreading delivery costs across its large customer base. In addition, its delivery services and Walmart+ membership were crucial to attract upper-income households that further expanded in-store orders and the customer pool.
Walmart also reduced its last-mile delivery costs by 20% in 2023, which increased efficiency and delivery volumes.
How was this achieved?
Walmart “densified” the last mile by delivering more packages per route. The retailer's advantage lied in capitalizing on its network of 4,700 brick-and-mortar stores within 10 miles of 90% of the US population. More than 4,000 of those stores grew into fulfillment centers (FCs) and delivery hubs.
To enhance last-mile efficiency, Walmart introduced parcel stations at its stores to streamline package delivery from FCs to customers through independent contractors or third-party carriers. These parcel stations not only extend the time customers can place online orders for next-day delivery but also facilitate easy and efficient distribution of online orders from stores.
Continued advancements and strategic implications of Walmart’s success
Walmart incorporates more automation in its fulfillment and distribution centers to further improve delivery unit economics. With the latest technology implemented in five of its 31 FCs, these automated sites can double the capacity and throughput compared to traditional centers, offering significant efficiency gains in delivering packages to customers.
Walmart's ability to lower delivery costs and improve efficiency through innovations like parcel stations and automation sets a benchmark for competitors to streamline their own delivery processes.
Replicating Walmart and Amazon’s success
Retailers can use their stores and FCs to create unique versions of Walmart and Amazon’s offerings for the businesses—here's how.
Regional the network for speed and efficiency
Traditional retailers already have a head start with their existing stores. If they optimize store and FC placements and utilize them effectively for fulfillment, they can establish a similarly robust regional network.
If a retailer analyzes regional customer demand, it can strategically divide operations based on population density, order volume, and proximity to fulfillment centers or stores. This will allow traditional retailers to utilize store-based fulfillment and optimize inventory placement.
In addition, route optimization and real-time tracking allow retailers to densify the last mile. The result: reduced costs, increased order fulfillment, shorter delivery times, and greater flexibility.
Diversify the last mile
Offer a variety of order and delivery methods, such as same- and next-day, click-and-collect, curbside pickup, and subscription-based models. Premium services such as designated delivery windows, white-glove delivery, and personalized concierge services increase profitability while offering convenience and a luxury experience for the consumer.
Strategic partnerships with a delivery management platform (DMP) provider that can facilitate third-party, in-house fleet management, or a hybrid model will also help diversify delivery. Walmart, for example, integrates its store infrastructure with online platforms to utilize both in-house and third-party delivery services. DMPs can help businesses choose the right delivery mode for each order based on factors like profitability, order density, and distance. Businesses can optimize resource allocation when they analyze these factors and assign orders based on the most efficient delivery method.
DMPs also expand a business’s geographic coverage, especially when coupled with advanced logistics capabilities that might include drones, cargo planes, and delivery vans.
Technology powers the engine
Technological advancements are key for businesses that want to replicate Amazon and Walmart’s last-mile delivery efficiency and meet evolving customer expectations.
A sophisticated order routing system integrates order details, inventory availability, and delivery options to determine the most efficient fulfillment and delivery pathways. For example, an effective system might split orders from different FCs or consolidate packages for streamlined delivery routes.
Real-time tracking technology enhances the customer experience with accurate and transparent delivery updates and maximum flexibility.
Automation and robotic investments in warehouses and FCs can streamline order fulfillment processes, reduce manual labor, and increase operational efficiency. Automated picking and packing systems and autonomous vehicles can accelerate order processing and minimize errors. They can also speed up delivery times, which improves customer satisfaction.
AI algorithms can analyze vast amounts of data and predict demand patterns and optimize inventory placement within the regional network. They can also ensure readily available stock at the closest FCs for rapid fulfillment. Both Amazon and Walmart use this technology to position inventory, minimize transit times, and reduce stockouts.
Learn from the giants
Amazon and Walmart didn’t build last-mile dominance by chance—they invested strategically based on clear business goals, deep consumer insights, and operational capabilities unique to their scale. While few retailers can replicate their end-to-end infrastructure, the real opportunity lies in decoding what can be adapted.
For retailers aiming to grow profitably in a highly competitive, delivery-driven landscape, their playbooks offer practical takeaways: use stores and fulfillment centers more strategically, streamline operations with automation, offer more delivery choice, and balance cost with service. By tailoring these moves to their own strengths, savvy businesses can close the gap on consumer expectations, differentiate themselves locally, and gain real competitive edge.
