Can Walmart workers deliver better last mile results on their way home from work?

Discussion
Photo: Walmart
Jun 02, 2017
George Anderson

Walmart is putting its store associates to work in a whole new way. The world’s largest retailer is testing a home delivery program that has associates dropping off online orders to customers on their way home after work. The test is being conducted at a store in Arkansas and two others in New Jersey.

Writing on the company’s blog, Marc Lore, president and CEO of Walmart U.S. eCommerce, characterized the test as “a win-win-win for customers, associates and the business.” Packages, he wrote, will get “to their destinations faster and more efficiently” while shipping costs will be cut and associates will pick up additional pay.

“It just makes sense: We already have trucks moving orders from fulfillment centers to stores for pickup. Those same trucks could be used to bring ship-to-home orders to a store close to their final destination where a participating associate can sign up to deliver them to the customer’s house.”

Participation in the home delivery program is voluntary. Walmart associates will use proprietary technology to set preferences for “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.” The retailer assigns deliveries to associates in a way that minimizes the distance they collectively need to travel.

With 90 percent of the U.S. population living within 10 miles of a Walmart, Mr. Lore thinks using associates to make deliveries could be “a game changer” for the retailer in its competition for market share.

Critics of Walmart’s labor practices say that there aren’t enough details known to determine if the program is a benefit to associates or a way for the company to exploit workers. Walmart has not offered specifics on what it will pay associates for making deliveries and whether gas and related costs will be factored into compensation.

DISCUSSION 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?

Braintrust
"If the employees are aware of the potential positive impact they can have on the whole customer experience then this could work very well for Walmart."
"Having associates deliver packages to Walmart customers on the way home is a creative way for Walmart to distinguish itself in customer service."
"OMG, in the long run, this is a disaster waiting to happen. The downsides are endless."

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37 Comments on "Can Walmart workers deliver better last mile results on their way home from work?"

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Mark Ryski
BrainTrust

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.

Ken Lonyai
BrainTrust

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.

Sterling Hawkins
BrainTrust

The locations and personnel Walmart has can be an incredible resource. Getting the compensation, customer experience, etc. correct will all take some doing though. It’s an idea worth piloting.

Ken Lonyai
BrainTrust

Aside from the pitfalls/liabilities eluded to by me and others, competent delivery is harder than it sounds. For example: we receive packages from a reasonably large online merchant that uses a known “last-mile” type of vendor to save on FedEx costs and there have been serious problems, so now our account is flagged for FedEx delivery only.

After the all the liabilities, what if’s, and training costs, a meaningful net gain is unlikely.

Max Goldberg
BrainTrust

I can see how employee deliveries can help Walmart by reducing costs, but I wonder if the plan will create enough benefits for employees so that they will want to participate. How much will Walmart pay employees and will it reimburse them for mileage and provide insurance while they are conducting this company business?

David Livingston
Guest
5 months 15 days ago

You said it in probably the nicest way possible. I see this as a way of Walmart cost shifting insurance liability and paying employees 50 cents a mile.

Art Suriano
BrainTrust
Not knowing the details of how the associates benefit is important. We don’t know about pay or gas and mileage reimbursement. However putting that aside and assuming the associate compensation will be all right, I like this concept. 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. Then take it one step further and think about the add-on sale opportunities right there on the spot when delivering the item. For example, the customer purchases a printer and the associate making the delivery tells the customer that if ordered now, they can save “X” percent on toner cartridges or perhaps save “X” percent on the extended warranty. I see this as a great way of adding customer satisfaction and… Read more »
Mel Kleiman
BrainTrust

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. The second question is, how are the workers going to be compensated for time and mileage?

Steve Montgomery
BrainTrust

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?

Bob Phibbs
BrainTrust

This seems like anything but progress for retail associates. Nordstrom used to encourage employees to deliver things on their way home. The practice stopped due to accidents and things going wrong — who paid? I would think this would be the same thing.

Ron Margulis
BrainTrust

This sort of flows from my frequently related opinion about the demise and potential return of the milk man (see several past comments).

There are many benefits including shopper engagement, upselling potential and employee appreciation. Plus there’s no worry about the FAA regulating your drones.

Timing will be the biggest issue — Walmart has some pretty unusual schedules for its associates, most aren’t leaving work at the same time each day. I suppose they can coordinate the outbound deliveries with the time and attendance system to address this. Payment for delivery and benefits/insurance could also be an issue. And don’t forget safety and loss prevention.

Also, one wonders if the employees will be picking up returns on their way to work.

Charles Dimov
BrainTrust

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!

Christopher P. Ramey
BrainTrust

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.

Tom Dougherty
BrainTrust

Ewww. I don’t like this idea at all. Delivery is the knee-jerk response from retailers to Amazon’s domination. Using in-store employees feels like a cheap way out and, as an avid online purchaser, I wouldn’t feel good about it. This feels like Walmart floating an idea to gauge interest rather than a firm initiative. It flatly doesn’t sound professional.

Dave Bruno
BrainTrust

Clearly there are compensation and execution issues to be resolved, but I sincerely applaud Walmart’s efforts to find ways to leverage existing investments in the store to expand store relevance. This program helps them leverage the store as a competitive asset against Amazon and further increase the store’s value to both the shopping journey and the enterprise. I hope they can overcome the challenges listed here and compensate associates fairly — and that others are inspired to find more ways to increase store relevance.

Lee Kent
BrainTrust

As always, there are ups and downs to this concept. I applaud Walmart for thinking outside of the box however I do see how messy this might be to manage. The employees sound like they want flexibility in this but Walmart has still made promises to the customers. How do you manage a moving target like that? I’m not sure but am interested to see. And that’s my 2 cents.

Joan Treistman
BrainTrust

My gut reaction is that there are too many landmines in this initiative for it to have a happy ending. First, I don’t see this as an equal opportunity for employees, especially the ones who don’t own a car or drive to work. It won’t work for bus riders.

There are too many pitfalls in an unstructured approach to delivery. On the way home is probably in the evening. Un-uniformed citizens showing up on streets, walking up to homes with packages sounds like an invitation for “see something, say something” false alarms. Does that put the employee at risk?

What else can go wrong? The package gets delivered to an incorrect address. It gets lost. The product is broken on the way. The car is in an accident and the delivery is delayed, maybe forever. How do you track package whereabouts?

Does the employee shoulder the responsibility for correct and on-time delivery?

Further, I don’t see the long-term upside for Walmart. Uneven delivery streams will lead to scattered successes and failures. Shoppers will remember and hold Walmart accountable for the failures.

I worry about the negative impact on employees.

Ross Ely
BrainTrust

Walmart will need to be very careful to structure this service as being clearly advantageous for their employees. It must be perceived as fully voluntary, with no negative repercussions for employees that decline to participate.

If Walmart makes the program lucrative enough for employees, it could in fact be a win all around. Walmart would reduce its delivery costs while employees would earn extra income and shoppers would get their packages more quickly.

Cathy Hotka
BrainTrust

This feels like a “what could go wrong?” moment from a number of angles — but I’ll address the “voluntary” aspect. Does anyone really think that associates won’t be pressured to do this? If they refuse, what’s the alternative? And remuneration to an associate would have to be less than a shipping service like FedEx would charge. I have never understood the economics of shipping heavy household items like liquid detergent (as Mr. Lore did at Jet) and this approach doesn’t seem to add up either.

Lee Peterson
BrainTrust

OMG, in the long run, this is a disaster waiting to happen. The number one law of retail is Murphy’s Law. Someone will eventually die in a car crash delivering packages, someone will steal them, someone will spill a drink on them, on and on (just ask UPS). The downsides are endless. And I’m not sure how it actually benefits employees, especially those who have to pick up kids or get dinner or, yeah, on and on.

Having said that, I do like the fact that they’re at least thinking of truly outside-the-box scenarios. In order to survive retailers will need to “think like Bezos” all the time, not just some of the time, and this fits that bill. It’s a little misguided but, from a macro level, nice.

Harley Feldman
BrainTrust

Having associates deliver packages to Walmart customers on the way home is a creative way for Walmart to distinguish itself in customer service. It would certainly set Walmart apart from Amazon using third-party delivery services.

Walmart is trying it right with a pilot project in three stores and only asking volunteer employees to deliver the packages. If it works well logistically, and the volunteer employees are willing to deliver the packages and get paid for doing it, it should be a win-win-win for the consumers and Walmart. An additional benefit will come from the likely appearance of the same delivery person going to the customer’s house repeatedly based on the small delivery area being assigned to the employee and the connection that will be built between the customer and the Walmart employee.

Peter Charness
BrainTrust

Hardly a scaleable, predictable resource that can be used to guarantee deliveries. See what happens at Christmas when the volume of deliveries exceeds the unpredictable capacity. Walmart has more locations closer to the customer than Amazon. As long as Uber is happy to lose almost $1 billion per quarter subsidizing travel in that last mile, stick them with the loss on home delivery. At some point the customer will actually have to pay fairly for the cost of delivery.

Ken Morris
BrainTrust

I absolutely think this is a game-changer for Walmart and many other retailers to compete with Amazon. Walmart has 11,700 retail units under 59 banners in 28 countries and employs 1.5 million in the U.S. alone with 90+ percent at store level. With 90 percent of the U.S. population within 10 miles of a location, how could this not be a game changer? Distributed Order Management (DOM) coupled with advance allocation algorithms and real-time inventory management will turn these retail units into distribution points where inventory tracked with RFID will be up-to-the-second accurate. This model will forever change the role of the store and will hasten the advent of Unified Commerce. The store is relevant again!

Meaghan Brophy
BrainTrust

It’s great to see Walmart continue to experiment, test and try new things. But right now this idea leaves us with more questions than answers. Will workers be required to have their own car and have insurance to participate? What about the many employees who don’t meet those criteria? How will pay be calculated for this? Who is liable if someone is injured or a package is damaged? Overall I like Walmart’s willingness to try and potentially fail, I just hope the employees are not the ones who suffer.

gordon arnold
Guest

The liabilities will need to be scrutinized very closely for this to launch properly. It does bring a lot of positives into play for all who are willing to participate. There is sufficient software capability to provide for this so tracking and time keeping will not be an issue. With the number of stores and employees, the potential is obvious. What needs to be discovered is employee willingness to participate in a way that makes the service dependable for the consumer. Employee availability that is on-again and off-again will greatly affect customer satisfaction. Consumers that complain about the unwillingness of employees to perform outside the scope of the project for reasons like assembly and/or staging product will place a toll on employee enthusiasm. But for the large majority of circumstances this can be overcome and for that reason it is very much worth a try.

Walmart logistics will collect and scrutinize the data from this plan and in no time at all will be able to plan and build a full-time delivery group that is efficient and profitable. That will be the game changer.

Shep Hyken
BrainTrust

I’m not sure if this is a game-changer, but it could tilt the field in Walmart’s favor. It could add to their competitiveness. This is another layer of convenience. And customers want convenience. It’s that simple. What I like about what Walmart is doing is that they are recognizing that there are other ways to compete besides price and selection.

Stefan Weitz
BrainTrust

I think this is a genius move. It isn’t highly replicable by other retailers since it will require associate density for the technology to make sense, but for Walmart this won’t be a problem. For a retailer that has smaller shops where only one or two associates work in a mall outlet, it likely isn’t worth the hassle.

Figure Walmart pays the associates their hourly wage to deliver and the average delivery run is three to four packages, the shipping cost just got cut by at least one-third AND they have higher satisfaction with customers (heck, humanizing Walmart through associates delivering packages to people’s homes isn’t a terrible idea).

Not to mention that Walmart has potentially written code that partially solved the traveling salesperson computer science problem that vexes all of CS. 🙂

Lesley Everett
BrainTrust

If the employees are aware of the potential positive impact they can have on the whole customer experience then this could work very well for Walmart. On the other hand, a less-than-pleasurable interaction with customers could create a negative layer to the brand that they don’t need. Overall a good idea to explore and if done well could have positive effects on the brand.

Dan Raftery
BrainTrust

This experiment will go away quickly. Professional delivery people are trained in how to deal with a range of hazards. I’m pretty sure Walmart employees are not.

Cristian Grossmann
Guest
Cristian Grossmann
5 months 15 days ago

The idea is a very efficient one. Since people already have to drive home, it only makes sense to have drop offs on the way. So the business sense is there, but not the logistics and what it means for employees wellbeing. Whether or not this is a game changer for retailers entirely depends on the unknowns. Do employees leave at the same time they were leaving before or earlier to account for the delivery time? How will they be compensated for extra time and fuel costs? Who is liable if the employee gets into an accident during one of these deliveries? It could turn into a liability nightmare if these issues aren’t addressed in full before implementation. Keeping this voluntary is necessary from a legal standpoint.

Craig Sundstrom
Guest

“(E)very word she writes is false, including ‘and’ and ‘but'” was once said of someone, and while I wouldn’t go that far with Mr. Lore’s claims, I don’t find them plausible. Walmart employees aren’t delivery specialists, except of course where they are actually hired to do that, and I don’t think they’ll be particularly good at it. What I imagine is lots of people driving around, getting lost, and endless litigation about unpaid overtime, uncovered liability and the meaning of the word “voluntary.”

Thomas Becker
Guest
5 months 15 days ago

Good use of consumer insights — 90% of population within 10 miles of a WM store. It’s a no brainer to try and with the volume running through Jet.com, expect this to become a full time position once they figure out the logistics. Alternatively it could just be a strategic move to create leverage for discount negotiations with FedEx, UPS.

Marge Laney
BrainTrust
5 months 15 days ago

I agree with Mel and Bob. Delivery requires a different set of skills and poses enormous potential liability.

What might be a better idea is for each store to hire specifically for the local delivery. Plus, additional investment in small trucks that advertise Walmart same day delivery would be good for business too.

How many people who would ordinarily order from Amazon might instead decide to order from their local Walmart? I would, especially knowing that I could return an item easily to the local store if it didn’t meet my needs.

Ricardo Belmar
BrainTrust

While Walmart certainly gets credit for thinking outside the box, you have to wonder how well thought out this approach really is. What will states like California think of this new tasking of store associates? Considering states that don’t allow business to ask employees to run training programs outside of their normal hours, this seems to be skating very close to the line on liability and insurance issues.

However, it also looks like a great way to internalize an Uber-like capability.

Perhaps that is how Marc Lore sees this becoming a benefit. We don’t know how exactly associates will sign up for this or what extra pay is involved, but it does feel risky. For that matter, why doesn’t Walmart explore using 3rd party on-demand delivery services in addition to this? I’m sure many Uber competitors would jump at the chance to sign up Walmart as a delivery customer!

William Hogben
BrainTrust

This is a no brainer and Walmart’s better positioned than anybody else to do this. They already experimented with having other shoppers drop off packages on their own way home, this is a great refinement not to mention a more eco-friendly approach.

Larry Negrich
BrainTrust

In a time of leveraging underutilized assets (Uber, Airbnb, etc) Walmart’s incorporation of its vast employee network to execute local delivery has some merit. Lots of challenges to systems, liability questions and associated pay practices need to be established but as Walmart has the 2nd largest employee network in the US, this does give it some additional advantages and shows there is additional value to harvested from brick and mortar store operations.

Jonathan Lander
Guest

Great, another way for Walmart to exploit its workers. Any mention of pay? Are they covered by any sort of insurance? This may be a good idea in theory but until they come clean with their labor practices this is a disaster waiting to happen.

wpDiscuz
Braintrust
"If the employees are aware of the potential positive impact they can have on the whole customer experience then this could work very well for Walmart."
"Having associates deliver packages to Walmart customers on the way home is a creative way for Walmart to distinguish itself in customer service."
"OMG, in the long run, this is a disaster waiting to happen. The downsides are endless."

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