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Walmart (WMT) Ups Delivery Game, Pilots Drones With Flytrex

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Walmart Inc. (WMT - Free Report) has always been on its toes when it comes to responding to the changing consumer environment. The omnichannel retailer has long been stepping up its e-commerce initiatives, especially its delivery game, as consumers’ preference for shopping online and getting products delivered at their doorsteps have increased over time. These trends have risen all the more amid the pandemic-led social distancing. Keeping in line with elevating its on-demand delivery services, Walmart unveiled that it is piloting drone delivery with Flytrex, which is an end-to-end drone delivery company.  

Management stated that the pilot launched on Sep 9 in Fayetteville, North Carolina. The pilot is focused on delivering certain grocery and essential household products from stores of Walmart to customers by leveraging Flytrex’s automated drones. As these drones are controlled over the cloud, it will enable Walmart to get a picture of the customers’ and employees’ experience, right from pickup to delivery.  

Though it may take a while for drone services to be expanded to greater deliveries, this move reflects Walmart’s focus on trying new technologies to cater better to the customers. In fact, industry experts believe that this move marks another step by Walmart to stay firm against the growing competition from Amazon (AMZN - Free Report) , which recently got a nod from the U.S. regulators to fly delivery drones.

Efforts to Enhance Delivery on Track

Apart from this, Walmart has been undertaking various moves to enhance deliveries. The company offers services such as Express Delivery, which helps deliver orders to customers in less than two hours. Walmart’s Pickup program enables customers to place orders online and then pick them up at a store. The company offers Delivery Unlimited membership options at 1,400 U.S. stores. Moreover, it will be launching the Walmart+ membership program, comprising unlimited free delivery, Scan & Go options and discount offers.

Walmart+ will be available in more than 4,700 stores, which will include same-day delivery in 2,700 stores. Apart from these, partnerships with Postmates, DoorDash, AxleHire and Roadie, and the acquisition of Parcel have been further supporting Walmart’s delivery capabilities. As of the end of the second quarter, Walmart U.S. had nearly 3,450 pickup locations and 2,730 same-day delivery locations.

Robust delivery services, together with other e-commerce endeavors, helped this supermarket giant to record a whopping 97% increase in U.S. e-commerce sales in the second quarter of fiscal 2021. Weekly average digital customer count and repeat rates grew significantly and boosted e-commerce sales. Also, marketplace sales jumped at a triple-digit rate. That said, we believe that efforts to step up deliveries like the introduction of drone deliveries are likely to work in Walmart’s favor, especially at a juncture where social distancing has led to increased demand for contactless deliveries.  

Markedly, shares of this Zacks Rank #3 (Hold) company have rallied 15.9% in the past three months compared with the industry’s growth of 14%.

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