Dive Brief:
- Walmart by Dec. 2 will lay off 1,458 employees at a facility in Fulton County, Georgia outside Atlanta, according to a filing with the state’s department of labor.
- Rival Amazon similarly has scaled back its fulfillment capacity after embarking on a massive expansion amid surges in online demand during the height of the pandemic, canceling or delaying dozens of warehouses.
- Walmart didn’t immediately return a request for more information and comment.
Dive Insight:
Walmart opened this facility to great fanfare in 2015, and the retail giant’s online sales have continued to surge since then. Last year Walmart.com revenue rose 11% compared to 2020.
The company’s vast network of stores is playing an important role in its logistics, and that recently got a boost via its acquisition of e-grocery automation firm Alert Innovation, which produces custom-built inventory-handling technology. That comes on the heels of other such efforts: In May, Walmart signed an agreement to deploy Symbotic’s end-to-end automation system across all 42 of its regional distribution centers after taking an 11.1% stake in the AI company.
But the meteoric pandemic-related rise in e-commerce has leveled off since vaccines became widely available and consumers returned to shopping in stores. It’s not clear whether the downsizing of the Fulton Country facility is a sign that Walmart is rethinking its online ambitions, though some analysts believe it should.
In a statement to Reuters, a Walmart spokesperson said that the company is converting the center to support its Walmart Fulfillment Services business, which supports its marketplace sellers. A Walmart spokesperson didn’t immediately return a request for comment about why that would necessitate a closure or layoffs.
Rival Amazon has leveraged ancillary businesses like marketplace fulfillment services to create lucrative revenue streams outside of its direct retail operations, having years ago ceded much of its online retail to its third-party marketplace. While Walmart appears to be following suit, it’s unlikely to succeed with such tactics, according to Nick Egelanian, president of retail estate firm Siteworks.
“I don’t see them ever making a profit on it or levering it to get into other more profitable businesses.” he said by phone. “I believe they are losing market share in all of their businesses while e-commerce is draining resources.”
