Walmart (WMT) has lined up new soldiers in the delivery wars with Amazon.com (AMZN): Its own store workers.
The discount giant is testing home delivery of some orders by Walmart associates heading home for the day in their own cars, offering them extra pay and the ability to opt in our out at will, the head of Walmart U.S.’ E-commerce Marc Lore said in a blog post on Thursday.
The delivery destinations will be close to where a worker lives or on the way to that person’s home. The idea is to have yet another option for completing the so-called last mile in a delivery—the portion between a store or distribution center and the customer’s home that is by far the costliest part of delivery– and increase speed as well as lower costs for Walmart. There is a Walmart store within 10 miles of 90% of the U.S. Population,
“Not only can this cut shipping costs and get packages to their final destinations faster and more efficiently, it creates a special win-win-win for customers, associates and the business,” Lore said in the post.
So far, the test, begun in April, is at two Walmart locations in New Jersey, where the company’s Jet.com subsidiary is based, and in Northwest Arkansas where Wal-Mart Stores is headquartered and has involved only a few hundred orders. Those involve home delivery of general merchandise, which can include dry foods but not fresh or refrigerated items. (The company is testing out home grocery delivery in two markets—Denver and Phoenix—with Uber, but is largely focusing on drive-by pick up for fresh and refrigerated food orders.)
Crucially, those orders have typically been for next-day delivery, said Walmart spokesman Ravi Jariwala. That is no small matter at a time Amazon is working on its own ways to speed up delivery, including opening up physical stores and testing the use of drones, moves likely to soon make next day delivery as basic a service as two-day delivery is now.
The test comes on the heels of other moves by Walmart to improve delivery since Lore, who sold Jet.com to Walmart for $3 billion, took the reins of its U.S. Online business last summer. Walmart recently gave customers an incentive to pick up online orders in stores by lowering the fees, passing on some of the shipping cost savings. And in January, it lowered its minimum threshold for free two-day delivery to $35, leading Amazon to make the rare move of following a competitor and lowering its own minimum. Walmart has also significantly beefed up its online marketplace, helping it clock 63% e-commerce growth last quarter.
While Walmart declined to say whether participating store workers get paid a fee for the delivery or simply more for the extra hours, nor discuss potential insurance issues, it did say those associates would have complete discretion in choosing how many packages to delivery (though the limit will be 10 deliveries), their size and weight, and how far. Those workers have been given an app that allows them to make those specifications, and Walmart’s routing algorithm assigns orders accordingly.
Customers don’t know when they place their order whether it will be delivered by couriers like FedEx, UPS or the U.S. Postal Service, or by Walmart, but store workers will be clad in their work clothes to make them identifiable.
