Walmart’s New Autonomous Car Program Aims to Bolster E-Commerce Business
This week’s news that Walmart is expanding its self-driving vehicle program comes during a period of rapid growth in online sales for the retail giant. The challenge now is figuring out how to convert those sales into more profits.
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Walmart will test the Argo AI in multiple cities, CNBC reported on Wednesday, which puts the retailer in new territory. The Argo AI is an autonomous car backed by Ford Motor. Under this partnership, Ford Escape hybrids will be outfitted with Argo AI technology for Walmart deliveries in Miami, the District of Columbia and Austin, Texas.
Under the program, Walmart customers can place online orders for groceries and other items for door-to-door autonomous delivery.
“This collaboration will further our mission to get products to the homes of our customers with unparalleled speed and ease, and in turn, will continue to pave the way for autonomous delivery,” Tom Ward, Walmart’s U.S. senior vice president of last mile delivery, said in a statement.
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The partnership between Ford and Walmart began in 2018, when the two companies launched a pilot program with self-driving vehicles. Walmart also operates self-driving delivery pilots with the Gatik and General Motors-backed Cruise, CNBC reported.
Online grocery orders are a key part of Walmart+, a membership program that launched last year and competes with Amazon Prime. Walmart+ members get free and unlimited grocery deliveries to their homes.
Online sales have gained steam during the COVID-19 pandemic, with so many customers either stuck at home or less inclined to visit physical stores. As GOBankingRates reported last month, the nation’s largest retailer posted a 37% year-over-year gain in e-commerce sales during its fiscal first quarter, with strong results across all channels. E-commerce sales have more than doubled over the last two years.
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But so far, those sales haven’t done much to bolster Walmart’s bottom line. The retailer’s online business isn’t profitable, CNN reported earlier this year. For now, it can make more money from third-party sales than from selling its own merchandise online. Walmart collects commission fees from third-party sellers such as Wild Bobby and Open and Clothing and then upsells merchants on ads, delivery services or even lines of credit through a partnership with Goldman Sachs.
Because Walmart hasn’t turned a profit with its e-commerce business, the company is under increasing pressure to develop more cost-effective ways to deliver items to customers’ doors, CNBC noted. That’s one goal of the new Argo AI program, which is Walmart’s first multicity service involving autonomous vehicles.
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