Cruise Is Teaming up With Walmart for Robo-Delivery

By Bruce Harpham Wednesday, November 25, 2020

Robo-delivery service is about to make a significant leap forward, thanks to Walmart and Cruise. Both companies are planning to launch a robo-delivery service in 2021. The pilot project will take place in Scottsdale, Arizona, and will use both autonomous, electric vehicles. Currently, Cruise has five test vehicles operating in Arizona and has not disclosed the total number of vehicles involved in the pilot with Walmart.

Cruise Advances During the Pandemic

Like many technology firms, Cruise has used the COVID-19 pandemic to push its technology to new heights. Through 2020, Cruise has been using its autonomous vehicles to make deliveries for food banks in San Francisco. This California test is possible thanks to a new permit issued by the state government. Unlike other autonomous vehicles, California has recently given Cruise permission to operate fully autonomous cars without a human driver behind the wheel. Traditionally, self-driving car tests have always included a human driver.

Besides Cruise, California has given the new driver-less permit to a handful of companies. For instance, AutoX gained the permit earlier in 2020. However, the AutoX permit comes with restrictions such as a speed limit of 45 miles per hour. Furthermore, the permit restricts vehicle operation to "fair weather conditions" only. Nuro and Waymo have also been awarded the permit to test vehicles without a human driver behind the wheel.

Is Cruise Changing Gears?

Majority-owned by General Motors, Cruise had been planning to focus on a robo-taxi service. Those plans appear to be on hold right now. Instead, the company’s entry into retail delivery services may signal a new direction. The autonomous retail delivery model may enable the company to minimize its liability by focusing on cargo rather than people. Cruise has not announced a start date for its robo-taxi service.

Arizona Rivals California for Autonomous Vehicles

Over the past decade, California has become the most popular destination for self-driving car testing. However, other states are not far beyond. Despite only having one-third of California’s population, Arizona is working hard to court autonomous transport companies like Cruise.

Arizona was the first state in the US to offer a commercial self-driving taxi service. Offered by Waymo, the service was first launched in Chandler, Gilbert, Mesa, and Tempe. In total, the state has more than six hundred autonomous test vehicles in operation. The state's reputation for sunny weather — 299 days per year on average — makes it attractive for self-driving car tests.

Ecommerce Spending Reaches $66 Billion Per Month

Cruise’s shift to offering delivery services for retailers may allow it to seize a growing market opportunity. In the third quarter of 2020, ecommerce sales were 14.3% of total US retail sales, according to the US Census Bureau. Total ecommerce spending reached $199 billion in the quarter, a 37% increase compared to the third quarter of 2019. That amounts to $66 billion in ecommerce spending per month. As the pandemic is likely to last into 2021, Cruise hopes to take advantage of shifting consumer habits. Demand for taxi transportation may be slower in the short term, while delivery demand may be much higher.

Walmart’s Partnerships Are Starting to Rival Amazon

For Walmart, starting a partnership with Cruise is aligned with the rest of the company’s digital transformation. Competing with other companies, especially Amazon, is why Walmart has invested so much in new technologies and partnerships. At present, Walmart has partnerships with Nuro, Udelv, Ford, and Waymo to further grow its delivery service.

Research by Capgemini found that “retailers could lose up to 26% of their profit if they fail to upgrade their logistics system to ensure on-time delivery” in the online grocery market. Walmart’s current fulfillment process combines delivery and curbside pickup. Given that Walmart has invested several years into drone delivery testing (Amazon and Walmart Drone Delivery Battle Persists), it is clear that the retailer plans to increase direct-to-consumer delivery service offerings in the future.

Aside from investing in technology, Walmart is competing with Amazon in other ways. In September, the company launched Walmart+, a direct competitor to Amazon Prime. For more on Walmart’s new program, read our story: “Walmart Plus Launches September 15 — Can It Outshine Amazon Prime?.” Walmart+ costs $98 per year and gives consumers free delivery, while Amazon Prime comes with a $79 annual fee.

About the Author


Headshot for author Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.

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