Walmart is currently the country’s largest grocer. With the unveiling of a new technology platform, it appears things will stay that way.
On Wednesday, Walmart introduced Alphabot, which is designed to help operators pick, pack, and deliver online grocery orders more quickly. The retail giant has been quietly testing the technology at one of its locations in Salem, New Hampshire, since last year. Walmart plans to continue testing and tweaking Alphabot until it’s ready for a broader launch across the U.S.
The announcement comes at a time when online grocery shopping is on the rise. According to Tom Ward, Walmart’s vice president of central operations, “We’re seeing that customers really enjoy using the service and that’s why we keep trying to innovate in the space.”
What Does Alphabot Do?
Walmart has been working with a Massachusetts-based startup, Alert Innovation, since 2016. The startup developed Alphabot, which is both a physical facility and a technology system, solely for Walmart’s use over two years.
The flagship Alphabot concept was built onto the back of Walmart’s Salem store, adding about 20,000 square feet to the total facility. Inside the new mini-warehouse, Alphabot uses autonomous carts to pick both refrigerated and non-refrigerated foods based on online orders. After retrieving the groceries, the autonomous carts drop them off at work stations where Walmart employees conduct quality checks and bag the items.
Walmart says Alphabot has reduced the time it takes to assemble and deliver online grocery orders dramatically. The company plans to expand to two new locations in Oklahoma and California this year. Looking further down the line, Walmart expects Alphabot facilities to service multiple Walmart locations in a given geography.
Online Grocery Shopping Becoming More Competitive
Walmart has slowly evolved into the biggest grocer in the U.S. Today, grocery sales represent more than half of the company’s total domestic revenues. In the most recent quarter, online grocery transactions boosted digital sales by 41 percent.
However, with Amazon looming and others, like Costco and Kroger, building out online grocery capabilities, Walmart has to fight to stay on top. The company has almost 3,100 pickup locations for online grocery orders today. Around half offer same-day deliveries.
Walmart also advertises an “unlimited” option at 1,400 locations. Customers can pay for unlimited deliveries on a monthly or annual basis. For $19.95 per month, Walmart will even deliver groceries directly to refrigerators. In the future, it’s possible the company will do these home deliveries with autonomous vehicles through its new partnership with Nuro.
Lots of Online Grocery Runway Left
Despite all of the buzz, online grocery shopping is still in the nascent stage in the U.S. Only three percent of all grocery spending takes place online, according to Bain & Co. In other countries, such as the U.K. and South Korea, online grocery shopping is as high as 15 percent in some areas.
Analysts expect technology and consumer expectations to continue driving demand for online groceries. By 2025, grocery eCommerce is estimated to reach $100 billion in value or 20 percent of total grocery retail.
In addition to increased revenues, online grocery sales provide retailers with a plethora of data points about shopper habits. Companies like Walmart plan to use this information to inform their inventory management operations and stock with higher precision. Before long, your local grocer may be ordering your favorite cereal brand just for you.