The Supply Side: Walmart continues autonomous delivery testing; some pilots paused

Walmart began testing order delivery via autonomous vehicles in select markets in late 2018, but the retail giant’s focus appears to be drone delivery. Walmart testing now includes grocery delivery with Flytrex drone service in Fayetteville, N.C.

The pilot will focus on grocery and household essentials weighing no more than 6.6 pounds and picked from Walmart stores. Analysts said drones offer the retail giant a less expensive way to deliver the final mile, cutting out the most costly element: labor.

The Flytrex drones are controlled over the cloud using a smart and easy control dashboard, which will help Walmart gain valuable insight into the customer and associate experience, from picking and packing to takeoff and delivery, according to the release. Flytrex had delivered groceries from select Walmart stores in North Dakota before the pilot in North Carolina, according to the startup’s website.

Tom Ward, senior vice president of customer product and innovation at Walmart, said it will be some time before drones deliver millions of packages, but said Walmart learns more each time it operates a pilot.

Another drone test with Zipline is supposed to begin in Northwest Arkansas early next year. Ward said on Sept. 14 that the Zipline pilot will make on-demand deliveries of select health and wellness products initially, with the potential to add general merchandise. Ward said the fixed-wing drones can serve a 50-mile radius and eliminate carbon emissions, which the retail giant favors.

TESTS SIDELINED 
The two drone announcements come as Walmart has paused three other tests that involve delivery with autonomous vehicles. In late 2018, Walmart began testing driverless cars with Postmates for grocery delivery in Miami/Dade County, Fla. That program has been put on hold, according to corporate spokeswoman Molly Blakeman.

Jason Shaffer, Walmart U.S. vice president of in-store fulfillment and automation, said during a recent webinar with Doing Business in Bentonville that another pilot using autonomous vehicle partner Nuro was also placed on hold as COVID-19 began to spread. The same is true for Waymo self-driving car deliveries that began in 2018 in Chandler, Ariz., in a pilot partnership with Walmart.

Shaffer said the pilots were placed on pause for now. Ward has said the insights Walmart has been able to glean from the autonomous vehicle pilots will help shape the way the retailer thinks about future options.

Shaffer said the pilot with Gatik, using a self-driving car to make deliveries from the dark store pickup center on J Street in Bentonville to the Walmart Neighborhood Market store 2 miles away at I Street and Airport Road, is still in operation. He said the Gatik vehicle carries online grocery orders picked from the dark store and takes them to the Neighborhood Market for customer pickup. Shaffer said the vehicle is making about two trips a day, and the retailer is learning more about the technology in the process.

NURO INNOVATION
While the Nuro pilot has been paused with Walmart, the Silicon Valley-based robotics startup said it continues to test its technology with CVS and Kroger in Houston, Texas.

Shaffer said the Nuro vehicle is smaller than a typical passenger model, is lighter, more nimble and operates at lower speeds. Unlike other models, Nuro does not require a safety driver, and it is continuously monitored by a remote operator who can take over control at any time. The Nuro electric vehicle moves at 35 mph, and Shaffer said the application allows for groceries to be delivered directly to the consumer without a human on-site. He said consumers use their phone and put in a code to release the doors, providing access to their grocery order. Shaffer said Walmart is considering what this will look like in the future and what the customer service application might be.

Kroger is using Nuro for grocery delivery in six ZIP codes in Houston. Customers who order groceries on Kroger.com for delivery pay $5.95 for the service in the pilot. Sola Lawal, home delivery service manager for the Houston area pilot with Nuro, said the technology is also being used to serve areas deemed as food deserts. In a recent blog post, Lawal said self-driving delivery vehicles could provide affordable and convenient access to healthy foods for those living in food deserts — areas where access to fresh and healthy food is limited.

“While existing grocery delivery services add $10 to $20 to the cost of an order, our goal is to reduce this delivery cost to $0, providing people living on fixed or low incomes the same convenient and affordable access to fresh fruits, vegetables, milk, or meat as those who live in food-rich areas,” Lawal said.

He said the Nuro model costs less to build and maintain. Also, because it’s electric, it’s more sustainable to operate. The pilot with CVS in Houston delivers prescription orders and non-meds ordered online. This service is available in three ZIP codes in Houston and is free for CVS customers.

LOOK AHEAD
A report by GlobalData said autonomous vehicles are expected to lower the time of delivery or online orders considerably. More than 75% of shipping costs in the U.S. are related to labor.

Shaffer said there is still much to learn about autonomous vehicles, and they will likely have a profound impact on the retail experience. He said consider what it would be like to have your car work for you. He can see a time when his car will drive him to the office as he’s checking email and drinking his coffee. It will drop him off at the door and park itself. Or perhaps there will be opportunities to rent it out to others who need rides, or it could run errands on behalf of the owner.

“Imagine a car that could take your kids to practice, and you would retain the chain of custody for the trip but wouldn’t have to go along,” he said.

He said technology is changing so rapidly, and the speed at which Walmart operates is also ramping up. Shaffer said conversations and ideas on napkins two to three years ago are now in full operation. He said the Alphabot automated picking robot in use in Salem, N.H., and a smaller version that’s sorting and storing grocery pickup orders at Walmart Store No. 5260 in Rogers, was only a sketch three years ago.

“Autonomous vehicles could be as important as the iPhone in the next few years and could change how we do everything,” Shaffer said.

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