Walmart has been America’s biggest retailer since the 1990s, its focus on low costs and ultra-efficient logistics helping it edge out competitors and keep customers coming back. But Amazon has been gaining on Walmart, and the pandemic gave the online retail giant a huge boost.
Both companies are continuously searching for ways to cut costs while meeting consumer needs. It seems one of the needs that’s steadily increasing is delivery. Whether due to busy schedules, health or safety concerns, or simply avoiding the stress of steering a loaded shopping cart up and down countless aisles, more people are trading in-store shopping for online shopping. Amazon clearly has a leg up over Walmart in that arena, but the brick-and-mortar retail king isn’t about to hand over its crown without a fight.
Yesterday Walmart announced it’s adding a new delivery service for goods purchased online—and not just any delivery service, but one powered by driverless cars. The company has partnered with automaker Ford and autonomous car startup Argo AI, and plans to use Ford Escape hybrid cars outfitted with Argo’s self-driving software to make deliveries.
The service will initially be available to customers in Austin, Miami, and the Washington DC area.
Although headlines about the announcement are emphasizing the driverless aspect of the delivery vehicles, they will in fact still have human safety drivers for the time being. And it’s unclear whether customers will retrieve their orders from the cars—that would make the most sense if the ultimate goal is to eliminate the safety drivers—or if drivers will get orders from the cars to customers’ doorsteps.
Consumer expectations around fast, seamless delivery are going up, probably thanks in large part to Amazon’s ability to meet those expectations (Prime customers have had the option of free same-day delivery since 2019).
But same-day delivery has some serious side effects to consider, including outsize stress on workers and a negative environmental impact. As Patrick Browne, director of global sustainability at UPS, put it, “The time in transit has a direct relationship to the environmental impact. I don’t think the average consumer understands the environmental impact of having something tomorrow vs. two days from now.”
Walmart and Amazon (and their smaller competitors) will continue to roll out services like autonomous delivery as long as consumers demand them (and are willing to pay for them). And as the big players in retail work to outdo each other and their technology improves, these services will likely drop in cost.
As consumers, we’ll take any innovation that makes our lives easier or saves us time. But once in a while, it’s probably worth asking: how badly do we actually need paper towels or dental floss or whatever’s in our virtual shopping carts dropped at our doorsteps within hours? Sure, shopping can be a pain, and some orders are truly urgent. But as our expectations around effortless, fast gratification rise—and the market accordingly shapes itself to meet those expectations—we should be conscious of the associated non-monetary costs.
A year ago Walmart launched its membership program, Walmart+, which includes benefits like prescription and fuel discounts and free grocery deliveries. Deutsche Bank estimates Walmart+ has about 32 million subscribers—and 86 percent of them also have Amazon Prime. To stay competitive and expand its membership program, Walmart is converting many of its stores into mini-warehouses with high-tech, automated systems.
Amazon, for its part, recently patented a delivery system that involves several small “secondary vehicles” dispersing from a truck to leave packages on customers’ doorsteps.
It appears the future of retail will involve a lot more technology and a lot less in-store shopping, whether you’re buying from Amazon, Walmart, Kroger, or any number of other stores.
Image Credit: Jared Wickerham/Argo AI