Walmart tests using store staff for last-mile deliveries

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Walmart today says it has begun testing using store employees to make last mile deliveries for online orders in select markets. The idea is an expansion on the retailer’s recently launched 2-day shipping program, which lets customers order from over 2 million online items for fast delivery without an annual membership. The company said it realized those same trucks could just as easily bring any Walmart.com or Jet.com ship-to-home orders to its stores, then allow the local staff to drive the packages to customers’ homes.

The test started small. Launched in April, there are only two stores in New Jersey and one in northwest Arkansas that are running this program today. But Walmart is already touting how the early results are promising.

For store employees who opt to sign up to do deliveries, it’s a way to earn extra cash – often just by expanding their commute home a bit.

Walmart says the program is optional for now, though if it decided to fully launch this program in the future, it could choose implement more structure. For the time being, however, if there were not enough volunteers from store staff, Walmart would continue to use local courier services.

Today, staff use a proprietary mobile app to opt in to the program and configure things like how many packages they want to deliver, the size and weight limits they’re comfortable with, and which days they’re willing to make deliveries after work using their own vehicle. Workers also have to submit to additional background checks, motor vehicle record inspections and provide proof of insurance.

A lot of technology has gone into the development of this program, hinting that this test is being seriously considered as an alternative way to handle last-mile deliveries at scale. For example, there are routing algorithms that minimize the collective distance the employees need to travel off their commutes home to make the deliveries.

Staff can also enter in other destinations they’re heading to after work, then be shown delivery stops along those routes. The app provides navigational assistance, as well.

In addition, Walmart has done a lot of work on its backend order management system to make this delivery program viable for both Jet.com and Walmart.com online orders.

Of course, one could argue that Walmart’s penchant for not paying workers a livable wage almost necessitates the need for its staff to have a second or side job – or, as many today say, a “side hustle.” A number of lowly paid workers across the U.S. now supplement their incomes by working in the gig economy – like driving for Uber or Lyft, for example.

In Walmart’s case, workers making deliveries will be paid hourly wages during deliveries  – which might be less than on competitors’ services, or when driving Uber – but they also have the perk of being an employee, not a contractor. That means they’ll have access to the standard employee benefits that come along with their job.

Shaving the cost on last-mile deliveries by leveraging workers looking for extra income isn’t a new idea for retailers. Google Express and Amazon Prime Now use local couriers to route their deliveries, for example (and have been sued for classifying workers as independent contractors and the low wages paid). Amazon also implemented a similar last-mile program via Amazon Flex back in fall 2015, which hires locals to deliver packages via their own personal bike, car, or van.

“We don’t think about this from a gig economy standpoint,” explains Walmart spokesperson Ravi Jariwala. Plus, he adds, Walmart’s program differs from others.  “In our scenario, associates are already starting where packages are – they’re probably leaving work and going home anyway – and our routing algorithm is designed to minimize the incremental time and distance that an associate would have to spend driving to make these deliveries,” he says.

Walmart’s advantage, too, is its stores. The company has 4,700 U.S. stores with over a million associates. Its stores are within 10 miles of 90 percent of the U.S. population, which means workers who take on deliveries won’t have to drive out of their way – or, as with Amazon Flex, drive to a Amazon fulfillment center that’s often outside the town it serves. Plus, Walmart can smartly route shipments to the closest store to its customers.

In the past, Walmart tested last-mile delivery via partners, like Uber, Lyft, and Deliv. Jariwala confirms that Uber is still being tested in Phoenix, but tests with Lyft and Deliv have wrapped.

Though only live for a month, Walmart found it could manage next-day deliveries through this delivery service, it said. But the delivery process is invisible to consumers – they’re not being promised anything beyond 2-day delivery, nor do they have to make special selections at checkout, or pay additional fees.

The launch of store associate-powered delivery is one of several changes Walmart has made recently to address Amazon’s threat. This year, for instance, it lowered the prices on a million online-only items if customers choose store pickup and launched free 2-day shipping without a membership. And it has been steadily expanding its online grocery business with curbside pickup, as well.

The retailer has not said when it expands to end the current test and make the new delivery program more broadly available.