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Walgreens will have its store employees pick and pack items for same-day delivery through third-party apps such as
DoorDash and Uber Technologies' Eats division. PHOTO: Taylor Glascock for The Wall Street Journal
Walgreens Boots Alliance is betting its 8,700 bricks-and-mortar stores, and not a network of fulfillment centers, hold
the key to speeding up delivery of online consumer orders and increasing sales.
The pharmacy giant recently closed a warehouse in Edwardsville, Ill., dedicated to filling e-commerce orders for
household items such as toothpaste and nail polish, signaling that it is going all-in on the idea that its stores will do
double duty as both retail outlets and hubs for home deliveries.
Walgreens will have its store employees pick and pack items for same-day delivery through third-party apps such as
DoorDash and Uber Technologies' Eats division.
The strategy, which doesn't include the company's pharmacy operations, is meant to make handling of online orders
more efficient by having a single system for handling goods rather than managing separate distribution networks for
e-commerce and in-store sales. Walgreens says 78% of Americans live within 5 miles of one of its stores.
The Deerfield, Ill.-based company joins other retailers including Target, Walmart and CVS Health that have started
fulfilling more online orders out of stores as a way to speed up shipments, streamline inventory and make more use
of their physical sites .
"There's a huge amount of efficiency in leveraging the sunk costs of a retail store as a place for fulfilling online
orders for customers," said Brendan Witcher, principal analyst at research firm Forrester Research. For convenience
stores like Walgreens, which rely heavily on stores' proximity to customers, "why not take advantage of them as
more of fulfillment locations?" he said.
Walgreens' comparable retail sales, those from stores and online channels operating for at least 12 months, and
excluding pharmacy, fell 3.3% in the quarter ended Aug. 31 compared with the prior year. The company's online
orders for retail goods rose 14.2% during the quarter. The company didn't disclose its revenue from online channels.
"It's that change in consumer behavior that we just absolutely cannot ignore," said Rajnish Kapur, the company's
chief sourcing and supply chain officer.
Customers shopping on the retailer's website or app can still opt to have items shipped in two to four days via
FedEx. Those orders are sent out from one of the company's 16 distribution centers that restock its stores, or from
what it calls hub stores that operate as small distribution centers.
But Walgreens is steering shoppers toward same-day delivery when items are in stock nearby. While checking out
online, customers who have selected no-rush shipping are asked if they'd like items delivered earlier, if possible. If
they opt in, their order is fulfilled by a local store's employees and delivered by DoorDash or Uber Eats.
Customers are charged $5.99 for either shipping or same-day delivery, a fee that is waived for orders of $35 or
DETAILS
Business indexing term: Subject: Employees Retail stores Drug stores Electronic commerce Automation
Inventory Business closings; Corporation: Walgreen Co Uber Technologies Inc;
Industry: 45611 : Pharmacies and Drug Retailers 45411 : Electronic Shopping and
Mail-Order Houses
Company / organization: Name: Uber Technologies Inc; NAICS: 513210, 518210; Name: DoorDash Inc;
NAICS: 492210; Name: Walgreen Co; NAICS: 456110; Name: Wall Street Journal;
NAICS: 513110, 516210
Classification: 45611: Pharmacies and Drug Retailers; 45411: Electronic Shopping and Mail-Order
Houses
Section: C Suite
e-ISSN: 25749579
Copyright: Copyright 2023 Dow Jones &Company, Inc. All Rights Reserved.
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