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Walmart and Home Depot Adopt Combined Distribution Network (CDN) Approach to Handle Local Deliveries

Walmart and Home Depot Adopt Combined Distribution Network (CDN) Approach to Handle Local Deliveries

Peter D G Raven, Editor, CargoNOW Magazine

Many of us in the Asia Pacific region would have heard of Walmart the retailing company that operates a chain of hypermarkets, discount department stores, and grocery stores across the United Sates. Home Depot, the home improvement specialty retailer along with other competitors like Mohawk Industries, Williams-Sonoma, Berkshire Hathaway, Bed Bath & Beyond and Lowe’s are perhaps not as well known in this part of the world.

In an unprecedented move, Home Depot announced in October that it is hiring Walmart to handle local deliveries for its stores to give Home Depot’s customers another way to have their online orders delivered on the same or next day. The specifics of the deal, such as the length of the agreement or their financial arrangement were not specified  however  the development marked the first publicly announced retailer deal for Walmart’s GoLocal delivery service, which debuted in August this year.

The white label service, which uses third-party drivers, delivers orders for other businesses across the country. Walmart had said that it signed deals with both national and smaller accounts when it launched GoLocal but did not specify any companies at that time.

Home Depot will begin offering the GoLocal service in select markets in the following weeks with plans to expand its use by the end of the year.

In a recent interview, Stephanie Smith, Senior Vice President of Supply Chain for Home Depot, said her company “is continuously working to give customers the most convenient shopping experience in home improvement, and that includes providing a wide range of fast and reliable delivery options. This partnership brings us even closer to our goal of offering same-day or next-day delivery to 90 percent of the U.S. population,”

A recent Bloomberg opinion piece suggested that a Walmart and Home Depot merger would make sense since the two companies represent the first and third biggest importers of goods through container ships. Their combined strength would give them the ability to lay claim to containers at a time when many retailers are struggling to get goods into the country. This collaboration of downstream or last-mile deliveries could therefore be a precursor of larger things to come or an extension of the practice of Combined Distribution Networks (CDN’s) adopted by these companies.

First developed as a proprietary concept by Dr. Raymon Krishnan, President of the Logistics & Supply Chain Management Society, in 1999, CDN’s extend the concept of collaboration to include competing supply chains, to reap efficiencies and improve performance for all stakeholders.

Home Depot has seen its online sales rise dramatically since the start of the novel coronavirus pandemic. The chain posted an 86 percent increase in digital sales last year and more than half of its orders were fulfilled by its stores.

The home improvement retailer is building a delivery network relying on third-parties to offer fast fulfillment to professional and do-it-yourself customers for jobs big and small.

John Furner, president and CEO, Walmart U.S said, Home Depot shares his company’s goal of “making fast and reliable local delivery available in every community” it serves.

 

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