Walmart Offers a Twist in the Delivery Wars

Workers will drop off packages on way home

June 2, 2017

Walmart is testing an unusual program in which employees drop off packages at customers' doors as they commute to and from work.

The initial test is limited to just three stores, two in New Jersey and one in Arkansas. But the company noted that 90% of US consumers live within 10 miles of a Walmart store, a potential advantage in Walmart's ongoing battle with Amazon.

The drop-off program, which Walmart stressed is voluntary for its employees, is another effort to take advantage of the chain's enormous footprint--and to find ways to shave last-mile delivery costs, which Walmart says represent the lion's share of the cost of shipping to customers' homes. In April, it unveiled "Pickup Discount," which gives discounts to customers willing to pick up in stores some online-only items. The discounts customers get are based on how much Walmart saves on last-mile delivery of the items.

"We’ve built technology that allows [employees] to set preferences," said ecommerce chief Marc Lore in a corporate blog post. "Associates choose how many packages they can deliver, the size and weight limits of those packages and which days they’re able to make deliveries after work – it’s completely up to them, and they can update those preferences at any time. We also allocate packages based on minimizing the collective distance they need to travel off of their commute to make a delivery."

For staffers, the program offers the opportunity to make extra money. "The best part is this gives our own associates a way to earn extra income on their existing drive home," said Lore.

Walmart and Amazon's evolving delivery systems and options are increasingly setting them apart from most other retailers. A Boston Retail Partners study found that most retailers are still working on implementing options like "buy anywhere, ship anywhere" and same-day delivery.

Last-mile delivery costs can often reach or even top half of total parcel delivery cost, a McKinsey & Co. study released in late 2016 showed.