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The test site is located at a Walmart store in Salem, New Hampshire, about 40 minutes northwest of Boston.

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Business Insider/Hayley Peterson

When I arrived, Walmart representatives led me to the back of the store, through a pair of double doors and down this narrow, fluorescent-lit hallway.

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Business Insider/Hayley Peterson

The Alphabot system is essentially a grid of shelving that stores grocery items. It can hold about 20,000 different products.

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Business Insider/Hayley Peterson

Human employees at the Salem store pick fresh items, such as apples and lettuce, for online grocery orders. Alphabot handles everything else, such as canned soup, frozen foods, refrigerated milk, and light bulbs.

The items are stored inside these blue bins, of which there are more than 16,000.

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Business Insider/Hayley Peterson

Walmart's online grocery store includes many non-food items that can be found in various departments of its vast supercenters. Alphabot stores shoppers' most frequent purchases, based on Walmart's sales data. 

Inside Alphabot, these wheeled robots whir quietly as they move vertically and horizontally along the shelving system, retrieving and depositing bins. The bots are about 2 feet wide by 2.5 feet long.

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Thirty of these robots operate in the Salem Alphabot. The system will eventually ramp up to add 20 more bots.

Unlike many other automated fulfillment solutions on the market, Alphabot robots don't need lifts or pulleys. They move vertically and horizontally on their own.

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Business Insider/Hayley Peterson

This lift-free mobility is an important feature of Alphabot because it saves space, according to John Lert, the CEO of Alert Innovation, which built the system for Walmart. The smaller the Alphabot, the easier and cheaper it is to build onto Walmart stores in the future.

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Business Insider/Hayley Peterson

At this station, the system helps workers sort and bag items.

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Business Insider/Hayley Peterson

When Walmart customers arrive at the store to pick up their orders, employees use these touch-screen computers to retrieve their groceries.

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Business Insider/Hayley Peterson

The system spits out bagged grocery orders and instructs employees on next steps.

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Business Insider/Hayley Peterson

After retrieving an order, employees stack them on these rolling carts for easy transport to customers' cars. Walmart also offers delivery to customers' homes.

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Business Insider/Hayley Peterson

Here's how a completed order looks when it is ready to be delivered to a customer.

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Business Insider/Hayley Peterson

After we watched Alphabot fill orders, a Walmart employee demonstrated how workers stock the system with products.

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Business Insider/Hayley Peterson

First, employees scan the products and enter an expiration date. They they place the items in a bin, which a bot carries away to storage.

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Business Insider/Hayley Peterson

Walmart isn't yet planning a nationwide rollout of Alphabot, but analysts are already betting that it could be part of a winning strategy against competitors like Amazon and Kroger.

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Business Insider/Hayley Peterson

Jefferies analysts crowned Walmart's online fulfillment strategy, including Alphabot, as "best in breed" in a recent 44-page research report comparing the fulfillment methods of major online grocers.

The analysts praised the company for pursuing small grocery warehouses, which the industry calls micro fulfillment centers, instead of giant standalone fulfillment centers, like the kind that Kroger is building with Ocado.

The smaller warehouses are less expensive to build and take advantage of Walmart's existing real estate to keep fulfillment as close to customers as possible, analysts said. This helps maximize convenience for shoppers and minimize last-mile delivery costs for Walmart. 

"Walmart's heightened focus on testing innovative technology, expansive store footprint, and leading market share have enabled it to become the clear front runner among the traditional retailers when it comes to omnichannel grocery offerings," the analysts wrote.


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