Wal-Mart Stores Inc. (NYSE:WMT) has started testing home delivery using Wal-Mart associates as delivery drivers. The portion of the delivery that occurs between a store or distribution center and the customer’s home is by far the costliest part of delivery. The initiative is expected to lower costs and increase the speed of deliveries. The employees will deliver Walmart.com and Jet.com orders in three U.S. cities.
Head of Wal-Mart U.S.’ e-commerce Marc Lore said, “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.” The initiative is currently being tested at two Wal-Mart locations in New Jersey and one in Arkansas. The deliveries are limited to general merchandise, including dry foods but not fresh or refrigerated. The test began in April.
Under the plan, associates will deliver some orders on their way home using their own vehicles. Lore said, “Once they’re done working at the store for the day, they pick up the packages from the backroom, load them into their vehicle, enter the delivery addresses into the GPS on their phone and head towards home.” The delivery destinations will be limited to those close to where a worker lives or on the way to that person’s home. Store workers will be clad in their work clothes when making deliveries to make them identifiable.
Wal-Mart said the participating associates would have complete discretion for choosing how many packages to deliver, their size and weight, and how far they are willing to travel. A proprietary app created for the initiative allows them to input those specifications, and the routing algorithm for the app assigns orders accordingly. Employees will be able to opt out of the initiative at will.
Lore said in a blog post that the associates will earn extra pay for the deliveries. Wal-Mart declined to say whether participating store workers get paid a fee for the delivery or simply more for the extra hours. The retailer said so far “hundreds” of deliveries have been completed under the initiative.
Wal-Mart has also made other moves to improve delivery. In January, the company lowered its minimum threshold for free two-day delivery to $35, which resulted in Wal-Mart’s biggest competitor Amazon lowering its own minimum. Wal-Mart also recently started incentivizing customers to pick up online orders in stores by passing on some of the shipping cost savings. The moves made by Lore appear to be paying off. Wal-Mart recorded a 63 percent increase in e-commerce growth last quarter.