Photo: Unsplash | Marques Thomas
Walmart Invests in Tech To Stay Ahead of the Competition
Retail giant Walmart is constantly investing in new technology to stay ahead of the competition. In the last few years, the company has rolled out a number of new initiatives, including drones to help with quick and effective deliveries.
Partnered with companies like DroneUp, Walmart has expanded its delivery operations in an exciting way. Drone deliveries are currently available in seven states: Texas, Florida, Virginia, Arizona, North Carolina, Arkansas, and Utah.
This technology, which companies like Amazon have also taken advantage of, has allowed customers to get items delivered to their doorsteps in as little as 30 minutes. They can even use the InHome service, “where they can get those orders placed right into their refrigerators,” according to David Guggina, senior vice president of innovation and automation at Walmart.
Drones aren’t the only tech that Walmart has introduced in recent years in order to improve its e-commerce business. Thanks in part to the pandemic, the retail industry has had to embrace technology like never before to keep up with customers’ growing desire for online service, and Walmart is fighting to keep its hat in the ring.
Beyond the tech conveniences for customers, Walmart has also implemented supply-chain automation to improve efficiency in its warehouses. Robot pickers have taken over some of the monotonous tasks from human workers, and this automation has led to fewer mistakes and improved inventory control. The bots retrieve products and deliver them to workstations, where Walmart employees scan and bag them.
This new technology is helping Walmart keep up with companies like Amazon that are using robots in their warehouses.
At the 2023 Investment Community meeting in April, Walmart’s leadership highlighted its plan for “reengineering its supply chain to fulfill customer needs with a more intelligent and connected omnichannel network that is enabled by greater use of data, more intelligent software and automation.”
Walmart is creating a “scaled system of supply chain capabilities that uses a combination of data, software and robotics” in order to provide better delivery service to customers and stores and react to customer demand more efficiently. As its president and chief executive officer, Doug McMillon, stated, Walmart is a “people-led, tech-powered omnichannel retailer.”
By the end of the fiscal year 2026, Walmart plans to have around 65% of its stores serviced by automation, and it expects that automated fulfillment centers will complete about 55% of orders by this time. This should reduce the average processing costs for products by up to 20%.
Walmart also hopes this automation will give them room to open up roles that don’t require as much physical labor but offer higher pay rates.
Ultimately, these are just a few ways that Walmart is using technology to improve its customer experience and compete with other retailers like Amazon, Target, and Costco. The company is also investing in tech like artificial intelligence and augmented reality, which have the potential to revolutionize the retail industry.
Discussion Questions
DISCUSSION QUESTIONS: Is Walmart’s push to innovate in technology enough to compete with other key players in the online retail space? What are some other ways Walmart could improve its e-commerce strategy?
Poll
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Walmart has been no stranger to innovation. They continue to test innovative technology and are not afraid to make mistakes. While many technologies don’t make it past the pilot stage, the ones that do will be the winners that help them differentiate them from their competitors. Using automation to drive costs out of the supply chain is a key way to improve order fulfillment efficiency and profitability.
Investing in technology to remain current – and perhaps edge ahead of the competition temporarily – requires a top-down commitment without a true end point. Personally, I have been impressed with Walmart’s willingness to spend on automation, ecommerce, delivery, and efficiency-driving technology. I don’t foresee this slowing down, therefore the game of leapfrog will continue.
Walmart has been investing in new technologies in all parts of their operations for years. This is no surprise. In fact, it’s an imperative and Mr. McMillon deeply understands this and has earmarked millions of dollars for innovative trials. Some work, some don’t, but the pace at which they are experimenting keeps them at the forefront of retail year over year.
Definitely! Walmart has embraced technology from the CEO down. Walmart has the funds to do a lot of R&D of which we see those things in which Walmart has decided – for better or for worse – to implement and deploy. They are very capable of running tests in limited stores or with limited product and suppliers without hoopla, which we may or may not see later.
The only way to compete with Walmart is to make smart investments in tech, too. Strategic implementations—ones that leverage AI and attack big pain points like returns, logistics, and labor management—tend to deliver the best ROI. It doesn’t have to be drones and Star Wars stuff, either. The key is to step back, look at your people, processes, and pain points, and make some important decisions while there’s still time.
I think, within reach of most retail organizations, MFCs and CFCs are the future for picking customer orders. Walmart is a first-in adopter of this technology. They are really competing with Amazon, and that is a hard to do given the ease in ordering that Amazon provides. The Walmart online experience is just not the same. By the way, I’m not sure where in Florida I can get drone delivery, as I have not seen it implemented in Sarasota county. It may be in test mode, but it clearly isn’t rolled out yet.
All the leading brands and retailers are effectively tech companies. Innovation and digital agility are the only way to stay competitive. And Walmart has been doing this for years. That said, their ecommerce shopping experience was lagging for a while. But these days you can see availability data (pickup, delivery speed) on the search results page. They’ve done a great job of showing that data earlier in the shopping journey which increases conversions. The biggest thing they need to do is keep innovating, and I have no doubt they will.
Every time I read about Walmart’s initiatives in technology, I think about Amazon’s relatively diminutive presence in physical retail. It just seems like Walmart is building the best overall omnichannel retail eco-system of the future. That will include healthcare, by the way. Surely Amazon has something up its’ sleeve, but I have run out of guesses.
Amazon is the tech leader. Walmart is doing a great job of keeping up. The differnece between Walmart and third place is a very wide chasm.
The challenge Walmart has regarding its e-strategy is that they don’t and maybe can’t have anything as ubiquitist s Prime. Walmart+ is good, but not in the same ballpark as Prime.
I think it’s the most amazing pivot since Microsoft realized Netscape and the internet were a thing and pivoted to IE.
Cleverly, an Amex platinum card gets you a free membership in Walmart+. Great way to up the demographics. I grabbed it.
I think they’re doing a fine job.
Walmart can afford to use tech to block out competitors in an arms race equivalent to the US demonstrating its economic power by announcing big projects. However, there appears to be little economic power to these announcements by Walmart. Are the announcements smart? Perhaps. Are they meaningful or customers? I doubt it.
Walmart’s tech investments, robust logistics and e-commerce partnerships make it a formidable competitor.
Expanding its marketplace and evolving deeper into social commerce will drive Walmart’s online sales. Virtual beauty try-ons, AI-driven personalized recommendations and digitizing its stores, including ship-to-home options, will also help.
As previously noted, WM has been doing this for a long time, and they have done a great job over the years of learning from others, and not treating technology companies like “vendors”.
Regarding their strategy, I believe the brand gets in the way of growth there. They are a “EDLP” firm, and not all income levels are going to avail themselves of ecommerce.
Just my view.
Walmart continues its trend from 15 years ago of investing, testing and stretching the use of technology – even showing some nimbleness as a big retail giant. They’ve understood the opportunity via their R&D is not only for cost and labor savings, but it’s also key to the shopping experience, the brand, to attract and keep customers.
Walmart still has opportunities to marry the online and in-store experience. With their stores often placed at farther distances from where customers live, these shoppers are seeking confidence in advance that their drive to the store will be worthwhile.
Investing in technology is perhaps the best way to gain an edge over competitors. Walmart has the resources and desire to do so, and has been doing it for years. Sadly, mid-level and independent grocers do not have sufficient resources to compete with the majors in terms of technology. They have to rely on outstanding customer service, which has never been Walmart’s strong suit.
Much – most? – advertising exists simply so someone can get their name before the public (or if it’s already there to keep it there); WalMart, obviously, has a huge advantage in that it’s already out there, and every day tens of millions of people keep it there by shopping them (whether in person or online). It’s a huge company, and it became one by being well run; that doesn’t mean, of course, they’re impervious – the online platforms have been criticized here numerous times on a variety of fronts – but I’m confident they’ll adjust. I’m less impressed by dronery, and such, not because I doubt their ability, but because I don’t see it really going anywhere (no pun intended)…at least not in the near term.
Walmart’s continued investment in tech innovation at all levels – in-store, supply chain, e-commerce, delivery – has certainly helped them to hold their own (I would actually argue in most cases they are winning) against other e-commerce giants like Amazon. As Walmart looks to improve its e-commerce strategy even further, it would benefit them to first focus on their core operations and fix issues where there were breakdowns from a people, process, and technology perspective. This will enable Walmart to pivot even faster and with greater success. As we saw with Bed Bath & Beyond, technologizing your business too quickly can be fatal if done incorrectly.
The “retail giant” Walmart also happens to be a major tech company. Given the enormity of their commercial operations, the continuous investment in technology has an obvious purpose to make the business more efficient. They have the means and resources to develop innovative technology for large-scale operations and in no way those technologies are inferior to Amazon’s. If these investments are successful, Walmart may even offer the technology to other companies for utilization in their operations.
In the end, the goal is perfectly clear: make or save more money for the business while keeping customer satisfaction at the forefront. If Walmart is successful in doing what they believe in, its efforts will be recognized in the retail community. Otherwise, there won’t be any shortage of critics in the event of failure.