Walmart is stepping onto Amazon’s mile-high turf with its latest patent.
While price and product remain key factors in the retail wars, going forward it will likely be delivery fulfillment that separates the winners from the losers.
By some estimates, non-food online sales already account for more than 14 percent of total sales in the U.S. And for apparel and footwear, e-commerce is expected to make up 40 percent of sales by the 2030s.
With e-commerce continuing to rise, retailers have to minimize the profit loss between the roughly 32 percent margin they generally make from in-store sales and the margin they make from online purchases, which starts at 30 percent and quickly heads south depending on how the goods are fulfilled, according to AlixPartners.
Both online pureplays and omnichannel retailers are trying to figure out how to give shoppers near instantaneous gratification while also controlling the costs associated with fulfillment. Currently, Amazon is winning in this area owing to its focus on sales over profits as well as the seemingly endless number of distribution facilities it’s building across the country.
This last mile dilemma is forcing stores to get creative. Walmart recently rolled out a low-tech solution in which it enlists store employees to deliver packages on their way home. But the mass merchant’s latest idea is much more space-age.
The retailer’s recent patent application depicts a blimp like floating launch system that would deploy drones carrying packages to customers’ homes.
Walmart isn’t the only—or first—to considering flying distribution centers. Amazon won a patent for a similar idea in December. But Khaled Fekih-Romdhane, managing partner at patent-licensing firm Longhorn IP, told Bloomberg Walmart’s design might have an edge since it goes into more detail about how the floating warehouse might work.
We’ll have to wait to see whether Walmart tries to one up Amazon on any of its other innovations aimed at making fulfillment faster and easier. In June, Amazon applied to patent a beehive-like fulfillment center, which would act as home base for a swarm of drones. Then last month, the retailer filed for one that submerges packages in water and manipulates a product’s density to surface it when needed.