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Wal-Mart Stores, Inc. (WMT) Has a Cool New Weapon For Amazon Delivery War

Walmart (WMT)

Wal-Mart Stores, Inc.  announced that it will test grocery home delivery service with ride-sharing services Uber, Lyft and Deliv. The online retailer is expected to start the testing delivery within the next two weeks in Denver and Phoenix. Wal-Mart is also testing drones to manage inventory at its warehouses, in a bid to compete with Amazon.com, Inc. .

Wal-Mart Stores, Inc.

Wal-Mart, the largest U.S. retailer, will use Uber or Lyft to test the last-mile delivery in small areas of Denver and Phoenix. The company’s CEO Doug McMillon is expected to discuss the pilot project at the annual shareholders meeting.

When a customer from the test locations will place an order, the online retailer will ask a driver from Uber or Lyft to come pick up the customer’s order and take it directly to the customer’s location. “We’ll also let them know their order is being delivered by a driver from Uber or Lyft,” the company said. There will be no additional fee to customers.

“We’re thrilled about the possibility of delivering new convenient options to our customers, and about working with some transformative companies in this test. We’ll start small and let our customers guide us, but testing new things like last-mile delivery allows us to better evaluate the various ways we can best serve our customers how, when and where they need us,” the online retailer said in a statement.

Meanwhile, Sam’s Club, owned by Wal-Mart, recently started testing grocery delivery with Deliv, a delivery start-up.

Wal-Mart Testing Drones To Handle Warehouses Inventory Efficiently

In other transportation news, Wal-Mart Stores, Inc.  is testing drones at its large warehouses. The online retailer says the flying machines will be used to handle inventory at its warehouses.

Shekar Natarajan, vice president of last mile and emerging science, said that drones could help catalog in as little as a day what now takes employees about a month, The New York Times reported.

The drone will tested in the next six to nine months across the company’s distribution centers. Last year, Wal-Mart applied to the Federal Aviation Administration for permission to begin testing drones.

The company is also testing artificial intelligence and virtual reality technology in the warehouses. The company, however, did not disclose more details about its plans.

Wal-Mart operates 190 distribution centers in the United States. Each distribution center serves 100 to 150 stores. The company’s fleet includes 6,500 trucks and 8,000 drivers.

In December, Amazon announced that it testing drones for fast and speedy delivery. The Prime Air program is designed to deliver packages up to 5 pounds in 30 minutes or less. Amazon said its drones will fly under 400 feet and weigh less than 55 pounds.

Berkshire Hathaway Cuts Stake in Wal-Mart

Warren Buffett’s Berkshire Hathaway reduced its position in Wal-Mart Stores, Inc.  by 1.69% during the first quarter.

The hedge fund unloaded 949,430 shares of the company’s stock during January-March period. Berkshire Hathaway held 55.24 million Wal-Mart shares at the end of March.

As we reported earlier, Wal-Mart announced that it is bringing back the “Smiley” face to represent low prices on items in its stores. “Smiley” is not just a marketing gimmick to create buzz about Wal-Mart. The company reiterated its commitment to low prices noting that “low prices have always been our key differentiator and we have an unwavering commitment to providing our customers with low prices every day”.

Wal-Mart seems to be doing better than most other peers, at least in the short term. That is what most analysts appear to think. For instance, it spent $2.7 billion to improve its staff by raising entry-level wages and more training. This led to higher customer service scores as well as store visits. Cowen Analyst Oliver Chen observed that there is positive traffic seen in US stores. This talks a lot about the real change the firm has brought about in the store experience. Even abroad, 10 out of the 11 markets in which the firm operates are in black.

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