Walmart testing self-driving cars for grocery delivery in Phoenix

Final-mile delivery is the most expensive element of online shopping and in the low-margin grocery business, every penny counts. Walmart continues to test several possibilities with its online grocery delivery business, with the latest test being self-driving cars from Google-owned Waymo which chauffeur customers to the store for pickup and returns them home.

The test with Waymo is with a store in Chandler, Ariz., according to Tom Ward, vice president of e-commerce operations at Walmart. Ward said in a blog the pilot is small but part of the retailer’s effort to look at different technologies that keep customers using online grocery coming back. Walmart did not say what this service costs customers, however they do receive a discount when placing the grocery order online.

“Waymo is a self-driving technology company with a mission to make it safe and easy for everyone to get around – without the need for anyone in the driver’s seat. They’ve safely self-driven over 8 million miles on roads across 25 U.S. cities already. We’re working with them on an online grocery pilot project – limited to a group within Waymo’s 400 daily users known as easy riders,” Ward noted.

He said 10 years ago shopping online for groceries seemed like something only the Jetsons did, but today the retailer has more than 1,500 pickup locations for grocery and continues to experience a surge in online grocery sales. Walmart is also working with third-party crowdsourced deliveries in markets such as Dallas, Phoenix, San Jose, Calif., Tampa/Orlando and St. Louis.

Earlier this year Ward said Walmart will offer grocery delivery to nearly half of U.S. households by early 2019 and will expand third-party deliveries in 100 new markets by year-end. Walmart U.S. CEO Greg Foran said in June the retailer sees plenty of opportunities with third-party delivery services who work with stores to get the orders to customers in a timely fashion. Walmart charges a $9.95 fee for the delivery which is added to ticket total. There is also a $30 minimum order to quality for home grocery delivery.

With this this new pilot, Ward said personal shoppers pick customer orders based on chosen pickup times and Waymo does the rest. Waymo picks up the customer and drives them to the store where they retrieve their order. They are then driven back home by the Waymo easy rider. He said the purpose of this pilot is to learn while also giving customers a unique experience with an amazing technology.

“Waymo’s experience, industry leading technology and mission on safety is helping us enter this space in the right way. We’re excited to see what this pilot and the future hold,” Ward said.

Waymo has been testing self-driving cars for about a year and is also working with Avis and Element Hotels as it expands its people-moving application hoping for greater acceptance by consumers. The test with Walmart is small in the Phoenix metro and involves roughly 400 consumers who signed up for the Waymo services which they access through a mobile app. Waymo said riders have been using the autonomous car service for running errands, commuting to work and school, going to restaurants and catching a ride after dropping their own car off for repair.

Waymo also recently said it would ramp up its partnership with Fiat Chrysler to have 62,000 Pacifica Hybrid minivans added to its fleet of autonomous vehicles. The company said it ordered up to 20,000 Jaguar SUVs with delivery to begin in 2020.

Walmart has also explored the use of self-driving technology to support its vast distribution network, pre-ordering 15 autonomous Tesla trucks last year for its operations in the United States and Canada.

While self-driving vehicles are far from mainstream, Waymo said it’s using the Phoenix market to work out bugs and learn customer reactions before launching in more cities. Consumers have become acclimated to riding with strangers by using Uber and Lyft, but it remains to be seen how receptive they will be to trusting computers to drive them on busy streets and highways.