Dive Brief:

• Sam’s Club is preparing to reopen a shuttered warehouse club store as a fulfillment center for online orders in Worcester, Massachusetts, according to the Telegram & Gazette. Operations will begin May 20.
• The 139,000-square-foot location closed last January when parent company Walmart announced plans to close 63 Sam's Club stores and convert some locations to online order fulfillment centers. Converted centers have opened in Memphis, Tennessee; Matteson, Illinois and Fort Worth, Texas.
• The average fulfillment center carries about 1,500 to 2,000 products including coffee, cereal and household products, the Telegram reported. The general manager of the Worcester facility expects to send out five to eight truckloads a day of filled online orders. 

Dive Insight:

For retailers to compete in e-commerce, order fulfillment centers located in key geographic regions that serve shoppers are becoming essential. Warehouse operations are especially important in driving down delivery times, and grocers are in an all-out arms race trying to beat one another on faster delivery.

While Amazon made waves with its push for one-day shipping last month, Walmart, which already offers speedy grocery delivery, has been laying its own foundation for quicker delivery with Sam's Club as well. Walmart has been strategic about its moves to support e-commerce and has shared plans to assess its many brick-and-mortar locations across both Walmart and Sam's Club banners. 

As the largest retailer in the world, Walmart has an advantage with an abundance of available real estate to convert to fulfillment centers or to serve as pickup points for online orders. Positioning fulfillment centers in the right markets with easy geographic access will ensure that its efforts have the biggest impact possible.

"Here in Worcester, you’ve got I-90. You’re not too far from I-95, I-495," Bob King, general manager for the new distribution center, told the Telegram. "You got a really good road network that can get you to major customer areas within a matter of a few hours."

Several other grocers are busy building fulfillment centers, with one of the most talked about being Kroger, which has started construction on its Ocado sheds. H-E-B is following Sam's Club's model by converting an underperforming store to an e-commerce fulfillment center to strengthen its robust e-commerce offerings. In February, Giant Foods opened its first e-commerce pickup and fulfillment facility in Pennsylvania, which operates as Giant Direct, Powered by Peapod.

Some companies are going the route of smaller, micro-fulfillment centers that require less startup capital and can be constructed quickly. Ahold Delhaize is opting for several automated micro-fulfillment facilities for Stop & Shop and if the approach is successful, it could expand to other banners. Albertsons announced a pilot last fall to test an automated micro-fulfillment facility in a single location, hoping to drive down grocery costs for the grocer and the customer.

In addition to its efforts with Sam's Club, Walmart opened a $41 million e-commerce fulfillment center in Kentucky last September and a similar facility in New York to support one-day delivery for Jet.com.