Walmart’s expanding fulfillment network, faster delivery and growing suite of AI-driven shopping tools are creating new opportunities for CPG brands to improve discovery, conversion and repeat purchases, according to Walmart US President and CEO David Guggina.
The retail powerhouse is growing its distribution network and its assortment, delivering nearly three-quarters (70%) of its online orders on the same day or faster, Guggina explained during a presentation at the Goldman Sachs Consumer and Retail Conference last week.
Walmart experienced 24% e-commerce growth in the most recent quarter, making it the company’s 10th consecutive financial quarter reporting 20%-plus growth for online sales.
“We’re enhancing assortment. When it comes to price, it’s just part of our DNA – we focus on operating at everyday low cost so that we can drive everyday low prices,” Guggina said. “And we’re leaning into new capabilities like automation and physical AI to make our network more efficient so that we can reinvest into price and reinvest into experience. We are improving the digital experience on our website, on the app.”
The expansion of its fulfillment and the growth of Walmart Marketplace could provide new opportunities for startup and well-established CPG companies alike, according to Guggina.
Sparky helps with shopping
Walmart’s biggest consumer-facing AI initiatives include its chatbot, Sparky, and the company’s partnerships with Silicon Valley tech firms to help ensure the retailer’s products turn up in AI-powered search online, through ChatGPT, Gemini and others.
“Sparky is becoming more and more capable as we move forward in time,” Guggina said.
The chatbot can now help customers check out, address customer service issues and make product suggestions from tens of thousands of recipes. Consumers can now use Walmart’s AI tool, available at the bottom of the retailer’s mobile app and online portal, to identify product needs by simply uploading an image, Guggina said.
“You can now take a photo and Sparky will help you shop depending on what your mission is with that photo,” he said. “When customers utilize visual shopping, we see the conversion rate jump by 57% versus text-based shopping.”
Quarter-over-quarter growth in Sparky usage eclipsed 60% in the company’s most recent earnings report. Customers who engage with the chatbot have an order 40% higher than the average customer, Guggina said.
Preparing for agentic shopping
Walmart is also committing to the growing field of agentic shopping, where AI agents pick out and order products with little oversight from consumers.
While many shoppers are still reluctant to leave the decision-making to AI, Guggina explained that Walmart is embracing what he referred to as agentic engine optimization, or AEO – a concept similar to search engine optimization (SEO), which drives traffic to websites from search engines – to ensure its products are discoverable in the brave new world of AI-powered shopping.
Walmart forged a partnership with OpenAI in October of 2025 and began enabling customers to place orders directly through ChatGPT, the AI company’s large language model.
Three months later, Walmart announced a similar deal with Google that would allow customers to shop directly through Gemini. Walmart said at the time that shoppers who link their Walmart or Sam’s Club accounts would receive AI-generated recommendations based on their past online and in-store purchases at the retailers.
“Customers that are coming to us from OpenAI and from Gemini are converting at very high rates,” Guggina said, adding that, “Many of these customers are new to Walmart or returning to Walmart, which is fantastic. And maybe most importantly, those new and returning customers have a very high organic repeat rate with Walmart.”
Fulfillment means SKU growth
Walmart’s fulfillment network growth remains a work in progress, according to Guggina. The company is investing in advanced robotics, modernized software, fulfillment centers and distribution centers.
The upgrades are enabling new efficiencies and faster delivery times for online orders, but Guggina said the work is far from done.
Using a baseball analogy, he explained the company is in the top of the fourth inning. Walmart’s distribution and fulfillment center expansion enables the company to avoid over or under stocking, he said.
The efficiency is enabling Walmart to expand its assortment, Guggina said.
“You reduce your units per SKU, so you can have more SKUs, a more unique assortment in fulfillment centers,” he said. “That makes more items available for 2-day delivery, next-day delivery, same-day delivery and sub-same-day delivery.”
Marketplace growth and CPG
Walmart’s expanding distribution network and broader SKU assortment could bolster Walmart Marketplace, its third-party online platform and a direct competitor to Amazon Marketplace, where independent brands can list products for sale.
Walmart reported 52% year-over-year growth at its Marketplace business in the most recent quarter.
While the bulk of Walmart’s Marketplace growth is in general merchandise, it’s providing inroads for established CPG brands, Guggina explained.
He said Nespresso is a good example of a brand that found a new market of customers through Walmart Marketplace. Although the brand already had a national presence in brick-and-mortar grocery stores, the brand began selling on Marketplace and found that higher-income earners began purchasing the brand
“We’re also seeing that over 35% of those customers, almost 40%, are new to buying coffee with Walmart,” he said. “But what’s interesting is as we’ve expanded our assortment and brought in more in-demand brands, both in [first-party and third-party], these customers who have engaged with us for decades are now engaging with us in new and different ways. And that comes to life in this new assortment.”
