Wal-Mart cuts delivery time for pilot shipping plan

By Nathan Layne

CHICAGO (Reuters) - Wal-Mart Stores said Thursday it was shortening the delivery time for an unlimited shipping program it is testing to two days from three as it taps a network of recently built warehouses for packaging online orders.

The retailer also said it was lowering the annual fee for the shipping program by $1 to $49. The pilot program was started last year, in part to counter the growth of a shipping plan offered by rival Amazon.com Inc for a $99 annual fee.

As part of a push to speed up deliveries, Wal-Mart will turn to regional carriers for an increasing number of its packages, according to a person familiar with the matter.

That could cut into the share of parcels delivered by FedEx Corp, which handles the bulk of Wal-Mart's packages.

Wal-Mart has earmarked $2 billion in spending on digital projects and its e-commerce infrastructure over the two fiscal years to January 2017. Some of that investment will go towards large warehouses dedicated to filling online orders efficiently.

The warehouses of about one million square feet in size, big enough to house two cruise liners, will utilize sophisticated computer programs and automated conveyor belts to sift and pack parcels efficiently. The company will open the eighth such facility in Florida later this year.

Those warehouses are fed in part by more than 150 distribution centers located across the U.S.

Wal-Mart also fills online orders from about 80 stores, where workers pull products off shelves, put them in boxes and ship them to homes.

The company generated nearly $14 billion in online sales in 2015, compared to Amazon's $92 billion, according to data from Internet Retailer.

(Reporting by Nathan Layne in Chicago; Editing by Chizu Nomiyama and Bernadette Baum)