Walmart’s investments in faster delivery and store-based fulfillment are starting to show results. The retailer reported its first-ever profitable quarter for e-commerce in the U.S., driven by a sharp increase in sub-three-hour deliveries and reduced last-mile costs.“Delivery speed continues to help drive our business,” said CEO Doug McMillon during the company's earnings call on Thursday. “We’ll soon reach 95% of the population in the U.S. with delivery options of three hours or less.”

Walmart said the number of deliveries made in under three hours rose 91% compared to the same quarter last year, with about a third of all store-fulfilled deliveries now falling in that category.

Behind the speed gains is a focus on network density and a shift in customer behavior. “Think about the opportunity to deliver a package to five houses on a street versus one house on a street,” said John David Rainey, Chief Financial Officer. “As we grow, we continue to spread those costs over more volume.”

Walmart offers store-fulfilled delivery to 93% of U.S. households today and plans to increase that to 95% by the end of 2025. It also operates 29 dedicated e-commerce fulfillment centers, complementing its last-mile infrastructure.

The company credited the combination of store-fulfilled and fulfillment center deliveries, along with customers paying extra for expedited service, with reducing net delivery costs.

Walmart charges a standard delivery fee of $9.95 for online orders, with an additional $6 tacked on for faster, three-hour delivery. Rainey noted that customers' willingness to pay for speed “shows the relevance of convenience” and has further helped offset operational costs.

E-commerce sales in the U.S. rose 21% in Q1, driven by double-digit growth in both pickup and delivery, as well as strength in advertising and membership revenue. Globally, e-commerce sales were up 22%, with Walmart reporting its first-ever global e-commerce profitability.

The milestone comes as the company faces cost pressures from newly implemented tariffs on imported goods. Still, McMillon expressed confidence in Walmart’s ability to adapt.

“We continue to be confident in our ability to strengthen this business even as we navigate cost of goods changes,” he said.