Walmart is back to the drawing board with its experiment to have store employees deliver packages for customers' online orders on their way home from work, the retailer confirmed to Retail Dive on Monday.
"There are many different ways we can deliver items to our customer's door. We're testing different ways we can do that, from expanding delivery to using the third-party providers to potentially using our own associates," a Walmart spokesperson told Retail Dive in an email. "The first associate delivery pilot ended early this year, and we've taken what we learned to develop a very different version of associate delivery that provides an improved experience for our customers and associates. The pilot has been running in one store in Georgia for the last few months and we're encouraged by what we're seeing."
The biggest stumbling block was getting employees to volunteer for the job, despite added incentives, because most were leery of using their own vehicles and personal insurance policies, according to a Reuters report.
This idea was first announced by Walmart U.S. e-commerce chief Marc Lore about a year ago, and was predicated on the notion that store employees could earn a bit of extra cash as they helped the retail giant solve the last-mile problem. He touted then the many "routes our associates drive to and from work and the houses they pass along the way."
But most employees had no delivery service experience and sign-ups were meager, Reuters said. The program was tested at three stores — two in New Jersey and one in Arkansas — and seemed like a perfect 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.
It's not turning out that way, suggesting that the last mile requires a more focused approach and perhaps a certain level of expertise, as offered by legacy players like the United States Postal Service, United Parcel Service and FedEx, as well as startups like Postmates and Instacart, which both have relationships with Walmart.
Competition is fierce among the same-day newcomers, and Postmates recently upped the ante with its expansion earlier this month to 100 new cities. That means it now serves almost half of the U.S. population — a big step in its efforts to scale. The company says it makes millions of deliveries a month and generates over $1 billion in gross merchandise value annually.
The apparent failure of Walmart's experiment underscores the challenges and costs inherent in the last mile and Walmart's own unfamiliarity with it. The retail giant has perfected the old-fashioned distribution of goods, from suppliers to store shelves, from which it has wrung a high level of efficiency. That in turn has helped it keep its "always low prices" promise.
Even with Lore at the helm, though, the world's largest retailer is grappling with the hard realities of e-commerce logistics, although it's unclear how well the retailer's second associate delivery pilot will do.