Walmart this morning announced a new pilot program that will test autonomous grocery delivery in the Houston market starting next year. The retailer is partnering with autonomous vehicle company Nuro, a robotics company that uses driverless technology to deliver goods to customers. Nuro's vehicles in this case will deliver Walmart online grocery orders to a select group of customers who opt into the service in Houston.
The autonomous delivery service will involve R2, Nuro's custom-built delivery vehicle that carries products only, with no on-board drivers or passengers, as well as autonomous Toyota Priuses that deliver groceries.
The program's goal is to learn more about how autonomous grocery delivery could work and how such a service can be improved to better serve Walmart's shoppers.
Nuro’s focus to date has been developing a self-driving stack and combining it with a custom unmanned vehicle designed for last-mile delivery of local goods and services. The vehicle has two compartments that can fit up to six grocery bags each.
The company has raised more than $1 billion from partners, including SoftBank, Greylock Partners and Gaorong Capital. In March, the company announced it had raised $940 million in financing from SoftBank Vision Fund.
Nuro is known for its pursuit of autonomous delivery. But it also licensed its self-driving vehicle technology to Ike, the autonomous trucking startup. Ike now has a copy of Nuro’s stack, which is worth billions, based on this latest round. Nuro also has a minority stake in Ike.
Nuro’s partnership with Walmart is hardly its first. The company partnered with Kroger (Fry's) in 2018 to test autonomous Prius vehicles and its custom-built robot, R1. The R1 autonomous vehicle was operating as a driverless service without a safety driver on board in the Phoenix suburb of Scottsdale. In March 2019, Nuro moved the service with Kroger to Houston, beginning with autonomous Priuses. In 2020, Nuro will test its second-generation robot, R2, with Kroger, Domino's and Walmart.
The Nuro partnership isn't Walmart's first autonomous delivery pilot, either.
The retailer earlier this year tapped the startup Udelv to test autonomous grocery deliveries in Arizona. This summer, it kicked off a test with Gatik AI, an autonomous vehicle startup to test grocery delivery from Walmart's main warehouse in Bentonville, Ark. Walmart also launched a pilot with self-driving company Waymo in 2018 to test rides to Walmart for grocery pickup, as well as a test with Ford and Postmates for autonomous grocery delivery.
"Our unparalleled size and scale has allowed us to steer grocery delivery to the front doors of millions of families – and design a roadmap for the future of the industry," said Tom Ward, Walmart’s SVP of digital operations, in a statement. "Along the way, we’ve been test driving a number of different options for getting groceries from our stores to our customers’ front doors through self-driving technology. We believe this technology is a natural extension of our Grocery Pickup and Delivery service, and our goal of making every day a little easier for customers," he added.
Walmart's Online Grocery business is booming, but today still relies on partnerships with third-party delivery services. Currently, Walmart partners with delivery providers across the U.S. to facilitate deliveries, including Point Pickup, Skipcart, AxleHire, Roadie, Postmates and DoorDash. It has also tried, then ended, relationships with Deliv, Uber and Lyft. By the end of 2019, Walmart Grocery will offer nearly 3,100 pickup locations and 1,600 stores that support grocery delivery.
The retailer's investments in its online grocery business helped boost sales and benefited consumers by offering an affordable competitor to Amazon, Target's Shipt, Instacart and others. In Q3, Walmart's grocery business helped online sales grow 41%, ahead of the 35% gain expected, leading Walmart to another earnings beat and 21 quarters of growth in the U.S.
In the quarter, Walmart earnings rose to $1.16 a share on revenue of $127.99 billion. However, Walmart's e-commerce business is losing money as it continues to invest in new technologies and acquisitions, which has led to internal tensions.
Walmart says its pilot program with Nuro will kick off in 2020.