When you think of Wal-Mart (NYSE:WMT), images of football field-sized stores, rock bottom prices, and employees draped in "How May I Help You?" vests likely come to mind. Images of high-tech innovation probably don't.
It's a stodgy brand, and Wal-Mart knows it. After years of ignoring the opportunity in e-commerce and letting Amazon.com (NASDAQ:AMZN) race ahead, Wal-Mart is now taking surprising steps to harness the power of technology in e-commerce and beyond to regain its competitive advantage.
1. A partnership in China
Just this week, the world's largest retailer announced a strategic partnership with JD.com (NASDAQ:JD), the largest e-commerce retailer in China by revenue, which includes Wal-Mart selling its Yihaodian e-commerce business to JD in exchange for 5% of the company. Wal-Mart had been struggling to grow its e-commerce business in China, so passing it along to JD and getting help from a native player with its supply chain looks like a win-win.
2. Robotic shopping carts
One of Wal-Mart's newest ideas is a shopping cart that would help customers find items in the store, and save them the effort of pushing the cart through the store and parking lot.
The retailer is partnering with a Five Elements Robotics on the project, though Wal-Mart has yet to make a public announcement about it. According to Bloomberg, the retailer is currently testing prototypes in its lab. Such carts could be a way for Wal-Mart to narrow the convenience gap with Amazon, especially with elderly or disabled customers who may need extra assistance.
3. Drones for more than delivery
Amazon introduced the idea of drone delivery to the public with a segment for its upcoming Prime Air service on 60 Minutes at the end of 2013. Wal-Mart has joined Amazon and other companies like Google in petitioning the Federal Aviation Administration for permission to use drones for delivery as the company claims that having a store within 5 miles of 70% of the U.S. population would make it an especially useful tool, but it also sees more uses for the aerial robots.
It's now testing the use of drones for inventory management at its warehouses, explaining that it takes a drone one day to catalog items that it would take an employee a whole month to do. The drones could eliminate tedious labor and save on wage expenses. Wal-Mart also envisions further applications for the drones, including potentially in stores.
4. Online grocery pick-up
Wal-Mart's rapidly expanding online grocery pick-up program may also be its most important tech initiative. Launched last year, the service allows customers to make grocery orders through Wal-Mart's smartphone app or website, and then pick them up from a kiosk in the parking lot at a previously selected time slot.
The program appears to be successful as the company recently expanded it to eight new cities, including Austin and Kansas City, making it available in 200 stores and 30 different markets nationwide. Amazon has struggled to roll out its Amazon Fresh delivery service nationally as perishables present a unique set of challenges for home delivery, giving Wal-Mart an advantage in the category. Groceries are also its most important segment as they make up more than half of the company's revenue.
5. Teaming up with Uber and Lyft
Earlier this month, Wal-Mart announced a pilot program testing grocery delivery with ride-hailing services Uber and Lyft. Extending its efforts to make grocery shopping convenient, Wal-Mart is tapping Uber in Phoenix and Lyft in Denver for the test. The fee for delivery would be between $7 and $10. Wal-Mart also began a similar test with Deliv earlier this year.
The process begins with a customer placing an order online. A Wal-Mart employee will then prepare it and order a car through one of those apps to make the actual delivery. Like Wal-Mart's other initiatives, the emphasis on last-mile delivery shows its increasing focus on the customer.
Wal-Mart is also rolling its new Walmart Pay mobile payment service and expanding a scan-and-go payment option so in-store customers can simply pay with their phone instead of having to go to checkout. As the retail landscape continues to change, expect Wal-Mart to further embrace technology.