When you think of cutting edge technology colliding with retail, Amazon (NASDAQ:AMZN) probably comes to mind. From cashier-less stores to experiments with drone delivery, Amazon is always pushing the boundaries. But a new partnership that was just announced puts Walmart (NYSE:WMT) in the futuristic tech spotlight. The company announced that it is teaming up with Ford (NYSE:F) for self-driving home delivery.
If successful, the pilot program would give Walmart bragging points over its online retail rival, but by replacing the Post Office and couriers for last mile delivery, it could also cut the company’s shipping costs to online customers in half.
Walmart and Ford Partner for Self-Driving Home Delivery
Walmart and Ford announced today that they are joining forces to offer self-driving home delivery of Walmart online orders, using Ford autonomous cars.
According to Walmart, the venture starts with a pilot program in Miami-Dade County. The two companies will be working with delivery service Postmates, which has established relationships with both Walmart and Ford, to deliver fresh groceries.
In a blog post, Ford explains what happens now:
“Over the next couple of months, we’ll be working closely with Walmart to understand its operations, identify what goods we can feasibly transport, and pinpoint any issues that may need to be addressed to successfully deliver orders via self-driving vehicles …. We’ll be exploring different vehicle configurations or modifications that we could make to meet people’s needs – especially to accommodate perishable goods, or scenarios where our vehicles end up making multiple deliveries on a single trip.”
Initially, the self-driving home delivery service won’t actually be autonomous. Instead, Ford will mock up vehicles to “simulate an autonomous experience” to see how customers interact with the deliveries. There are also technical challenges with Ford’s self-driving technology to iron out and as Reuters points out, regulations for issues like liability have yet to be updated to reflect fully autonomous operation.
But with Ford targeting 2021 for commercial production of its autonomous cars, the future could arrive quickly.
Trying to Leapfrog Amazon
One of Walmart’s key strategies over the past year has been to ramp up its battle with Amazon. There has been a seemingly non-stop list of projects and initiatives that go head-to-head with Amazon, including taking on its Kindle eReader business, and working on a competitor to Amazon Prime video. The ultimate objective of course, is to take on Amazon’s online retail business, while also fending off AMZN’s push into groceries. Two critical issues that have a big impact on WMT revenue and Walmart stock.
Walmart launched a major re-design of its website this year in an effort to lure online shoppers away from Amazon. Its existing partnership with Postmates will see grocery delivery available from 800 Walmart stores by the end of this year.
But Walmart wants to take the high tech spotlight off Amazon, and take a leadership position instead of being seen as reactive. That’s where the self-driving home delivery partnership with Ford comes in.
Amazon offers futuristic services like Amazon Key in-home delivery. This requires a home outfitted with Amazon smart home tech, including a Cloud Cam and supported smart door lock. It’s not something Walmart could easily replicate. And it’s also limited to a small subset of customers willing to invest in the required equipment.
Self-driving home delivery on the other hand, is something that can be announced now, and it ultimately would be available to all customers (at least those in major urban areas), giving Walmart bragging points. With autonomous cars in the headlines, consumers are going to look at Walmart as a pioneer. The Ford cars won’t actually be autonomous immediately, but that’s not the point. This is futuristic technology that Walmart has and Amazon doesn’t.
In addition to beating AMZN to the punch, if it wants to compete with Amazon for online sales, Walmart has to come to grips with the prospect of the $21.7 billion Amazon spent on shipping last year. If this pilot project works out for Walmart and Ford, Walmart stands to save a lot of money on last-mile shipping costs. If you live in Miami and order groceries from Walmart, you may just see an autonomous-looking Ford car deliver your order.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.