Walmart’s Logistics Investments Are Banking a Profit for E-Commerce

Despite Walmart’s tepid 2025 outlook serving as a possible harbinger of things to come for consumer spending, the retail giant continues to shorten the supply chain to improve the profitability of its e-commerce business.

Walmart U.S. saw 20-percent e-commerce sales growth in the fourth quarter, with chief financial officer John David Rainey calling out improving unit economics due to more densified delivery routing and contributions from newer business segments.

E-commerce delivery costs per order were cut 20 percent in the fourth quarter, a year after Walmart cut these costs by the same percentage. With those savings, operating income across the online segment grew faster than sales in the quarter, Rainey said.

“Instead of delivering a package to one house on the street, one of our drivers is now hitting four or five houses on that street,” Rainey said during the company’s Thursday morning earnings call. “We’re able to spread those costs over more volume.”

For the full year, Rainey said Walmart U.S. saw an 80-percent improvement in total e-commerce losses compared to 2023.

The CFO also highlighted that more than 30 percent of customers that have a package delivered from a store will pay a convenience fee for expedited one-hour or three-hour delivery. A whopping 77 percent of orders placed on Christmas Eve were through this express service.

Expedited deliveries within those delivery windows grew 180 percent year over year, according to Walmart U.S. CEO John Furner. He said Walmart delivered 5 billion units via same-day in 2024, representing more than 100-percent growth over the year prior.

Same-day, store-fulfilled delivery catchment areas now reach 93 percent of U.S. households, Rainey said.

Rainey highlighted that Walmart+ memberships and advertising through its Walmart Connect retail media segment both have helped bolster e-commerce margins as well. Global membership income grew 16 percent in the quarter, while global advertising revenue increased 29 percent.

In total, Walmart’s global e-commerce operation grew 16 percent, led by store-fulfilled pickup and delivery. E-commerce now comprises 18 percent of total sales at Walmart, 11 percentage points higher than the fiscal year ended Jan. 31, 2020, just ahead of the Covid-19 pandemic.

Walmart should continue to see progress on the online profitability front, with Rainey indicating that investments in automation throughout the supply chain are expected to further lower the retailer’s cost to serve.

The Bentonville behemoth is pouring billions into automation throughout the supply chain, planning to open its fifth high-tech fulfillment center in Stockton, Calif. by next year. These facilities are designed to enable next-day and two-day shipping nationwide on more products, and double the storage capacity of a traditional Walmart facility.

Walmart is rolling out autonomous forklifts in these locations, which reportedly costs $200 million.

The upgrades at these sites are not even accounting for the wider initiative across regional distribution centers, where Walmart is already retrofitting 42 locations with various automation projects by 2030.

America’s largest retailer also recently sold its Advanced Systems and Robotics business unit to partner Symbotic for $550 million. The robotics company will be tasked with building and deploying an automation system for 400 of Walmart’s accelerated pickup and delivery centers. This is aimed at helping the retailer speed up the systems that power its in-store pickup and same-day home delivery services.

“You don’t deliver the bottom line at twice the rate of growth as the top line without some of these investments that we’ve made,” Rainey said of the supply chain automation efforts.

Elsewhere throughout Walmart’s supply chain, the company’s e-commerce U.S. Marketplace offering for third-party sellers saw 34-percent growth, with users of Walmart Fulfillment Services (WFS) reaching record penetration of nearly 50 percent, up nearly 6 percentage points year over year.

In both Mexico and Canada, the number of WFS sellers increased over 20 percent and sales of items delivered through the Fulfillment by Amazon (FBA) competitor grew over 85 percent.

While stakeholders across retail supply chains have been concerned over the tariffs—and threats of them—thus far levied by the Trump administration, Walmart doesn’t appear to be concerned.

Even with the lower-than-expected guidance, Walmart is more worried about the wider uncertainties related to consumer behavior, alongside the global economic and geopolitical concerns.

“Tariffs are something we’ve managed for many years, we’ll just continue to manage that,” said CEO Doug McMillon in the call.

Rainey followed McMillon up by saying Walmart didn’t bake the tariffs into its guidance.

“Will it turn out differently than maybe what we expect today? Perhaps, and we feel good about our ability to do that though,” Rainey reassured.