Is Walmart's new last-mile delivery program brilliant — or a disaster in the making?
The Uber-like program will have store associates delivering packages on their way home from work. Will it work for Walmart?
Walmart store associates may be coming soon to shoppers' doorsteps.
Walmart announced earlier this month that it was testing a new delivery method — one that has store associates making deliveries on their way home from work. Marc Lore, president and CEO of Walmart U.S. e-commerce, pointed out on the company’s blog that 90% of the U.S. population lives within 10 miles of a Walmart store. Product is already being delivered to stores and associates can sign up each day to take packages to their final destination and earn a little extra money.
“Walmart has strength in numbers with 4,700 stores across the U.S. and more than a million associates," Lore said. "Now imagine all the routes our associates drive to and from work and the houses they pass along the way."
While the program is currently being tested at three stores — two in New Jersey and one in Arkansas — the system is an example of how multichannel merchants can further leverage their installed store base to compete with Amazon, its network of distribution centers, and a growing fleet of delivery options.
"This effort provides Walmart with even more control over the last mile, which we believe is critical in retail, and remains an advantage for brick-and-mortar retailers as speed to the customer gains increasing importance,” Moody’s Lead Retail Analyst Charlie O’Shea told Retail Dive in an email.
But while Lore’s technology-based approach and Walmart’s many stores may be up to the challenge, it’s an extremely complex endeavor that doesn’t quite fit with Walmart’s longtime efficiencies in consumer goods distribution, which entails the customer taking care of that last mile. The program is either an ingenious attempt to address last-mile delivery problems — or terribly misguided, depending on who you talk to.
As rival retailers ponder how to compete with Amazon's robust delivery infrastructure and make the most of their store footprints, the discussion forum RetailWire asked its BrainTrust panel of retail experts the following questions:
- Do you see Walmart’s use of employees to make deliveries on their way home from work as a potential last mile game changer for the retailer?
- What do you see as the benefits and potential pitfalls of this program?
Here are eight of the most provocative and insightful comments from the discussion. Comments have been edited by Retail Dive for length and clarity.
1. Outside the box
Mark Ryski, Founder and CEO, HeadCount Corp.: I’m not sure if it will ultimately be a game-changer, but full points to Walmart for thinking about the delivery challenge in a completely new way. One of the big benefits is in providing employees an opportunity to earn additional income — essentially "Uberizing” employees’ commute home. Making the program voluntary is an important element of the program since not all employees will want to do this. And if this gets customers their deliveries sooner, that’s great too. Of course there are plenty of ways this could go wrong, but I’m sure Walmart will stress test the idea thoroughly before it gets too far. Overall, I think this is a great example of how innovation doesn’t always need to be just about technology.
2. Cheap and desperate
Ken Lonyai, Digital Innovation Strategist, Co-Founder, ScreenPlay InterActive: Walmart is not known for the happiest employees. Even with pay, I don’t think too many will openly embrace this idea. If they do, there are umpteen things that can go wrong with this idea that make it sound, to me, like a cheap and desperate move by management. Back to the drawing board guys.
Mel Kleiman, President, Humetrics: I am not a lawyer but all I see is a major liability problem for Walmart if one of those employees has an accident on the way to delivering an order. How are the workers going to be compensated for time and mileage?
4. Getting it right
Steve Montgomery, President, b2b Solutions, LLC: The concept sounds simple but as with many things the devil is in the details. An employee who is driving home from work is off the clock and no longer being paid by Walmart. However, if they are delivering packages for the company they would be eligible for compensation. If the time delivering the packages bumps them up to the number of hours to be considered full-time they would be eligible for the benefits that come with that status. If the delivery time took them over 40 hours, overtime would have to be paid. As an employee on the clock is Walmart still legally responsible for their actions?
Some other details would be: does the driver get paid mileage, who is responsible if they have an accident and what happens if the packages get damaged, stolen or lost in transit?
Charles Dimov, Director of Marketing, OrderDynamics: Game changer — no. Innovative? Definitely. Kudos to Walmart for looking at ways to improve and strengthen their service offering while improving their margins. Presuming they will pay their employees a benefit for doing this last mile delivery, it is another great way to tap into their own resources to drive the holistic benefits of omnichannel retail.
In fact, at a time when so many retailers have been closing their physical presence, this type of out-of-the box thinking needs to happen more with retailers. This empowers employees to make a difference that can count in supporting the company and their important roles. Well done Walmart — keep surprising us!
Art Suriano, CEO, The TSi Co.: Think back to the days of when in the ’50s and ’60s. We had the bread man, the milk man, the egg man and much more all making home deliveries. There was more than just a purchase of an item and payment; there was a relationship formed with the customer and the delivery person. I see the same benefit here with many of the store associates delivering items to customers. If they are well trained and engage with the customers they meet, this could be very beneficial for all parties involved.
7. Returns too?
Ron Margulis, Manager Director, RAM Communications: One wonders if the employees will be picking up returns on their way to work.
8. What took so long?
Christopher P. Ramey, President, Affluent Insights & The Home Trust International: Independent and/or small businesses owners (and employees) have always delivered products “on the way home.” Why not? Employees will like it because they get out of the store earlier. They’ll also, if they carefully manage it, keep count on mileage for tax purposes. Management will enjoy leveraging a key differentiator: feet on the street to serve clients.
The only “ah-ha” to the strategy is why it took so long.
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