This article first appeared on GuruFocus.
Walmart (NASDAQ:WMT) is changing the carts employees use to <a href="https://www.tipranks.com/news/walmart-making-changes-to-store-shopping-carts-to-avoid-hitting-children” rel=”nofollow noopener” target=”_blank”>fulfill online orders after reports that shoppers, including a child, were struck by them, highlighting an unexpected operational challenge created by the retailer’s booming e-commerce business. The adjustments are unlikely to materially affect earnings, but they show how Walmart’s push for faster delivery is making its stores more complex workplaces and fulfillment centers.
The retailer is modifying procedures for the large carts workers use to collect items for pickup and delivery orders. Walmart has reduced the number of containers carried on some carts, adjusted guidance on when employees should push or pull them, and is introducing new wheels designed to improve handling and visibility.
A Walmart spokeswoman said keeping employees and customers safe remains a top priority and that the company continually reviews feedback and adjusts operating practices when necessary.
The issue is becoming more important as digital orders increasingly move through Walmart’s physical stores. Global e-commerce sales jumped 26% in the latest quarter, while Walmart U.S. e-commerce also grew 26%. Store-fulfilled delivery increased roughly 45%, helping e-commerce contribute about 5.3 percentage points to U.S. comparable-sales growth.
Speed is central to that strategy. About 36% of Walmart’s store-fulfilled deliveries now arrive within three hours, meaning employees are picking more online orders inside stores while traditional customers continue shopping the same aisles.
That model is paying off financially. First-quarter revenue increased 7.3% to $177.8 billion, while operating income rose 5% to $7.49 billion.
Investor Takeaway
Investors should view the cart changes as a small operational issue with a larger strategic lesson. Walmart’s stores are increasingly functioning simultaneously as supermarkets, warehouses and last-mile delivery hubs.
The key metrics remain e-commerce growth, delivery speed and fulfillment profitability. If Walmart can keep accelerating store-based delivery without higher labor, safety or liability costs, its enormous physical footprint becomes a competitive advantage against pure online retailers.
Repeated safety problems, worker injuries or operational slowdowns would weaken that advantage by increasing costs just as customers demand faster delivery.
