Author(s): Raghu Gopal
In Walmart nomenclature, employees are called Associates which explains the title given to the company's newest experiment to compete with Amazon: Associate Delivery. In its announcement, Walmart claims the service creates a "win-win-win" situation for customers, employees and the business.
With Associate Delivery, employees are given packages to drop off after work, repurposing the return ride home into a delivery route. Participation in the programme is voluntary and employees will be compensated for their time. Walmart says it has developed an app-based technology that optimises the process, allowing employees to determine how far out of their way they can go to drop off packages.
Walmart has more than 1 million employees in the US, so this effort at creating a crowdsourced delivery crew does have enough participants to work with. As the company points out, the drivers are already at the point of pick-up and will be headed close to the point of drop-off.
There's a theoretical pragmatism here that's difficult to argue against. At the same time, without knowing more details, it appears that real-world scenarios will put this concept to the test. Drivers get into accidents, they speed, they lose things and they forget. Morphing professional delivery into an extracurricular activity must be filled with lots of fine print.
Walmart may have been looking for a way in which Amazon can't possibly respond, but there will be no deer-in-the-headlights look from Amazon, which has developed what seems to be a magical logistics chain. Press the check-out button and the goods appear in front of your door. Or sometimes it feels that way.
Walmart's after-work drop-off strategy feels a bit like it's using a hodgepodge of vehicles to enhance its delivery service. This will be an augmentation to other professional parcel services Walmart uses. The company is currently testing the concept at a few stores in Arkansas and New Jersey.
The move by Walmart is the latest step in its campaign to counter Amazon's online dominance. Faster shipping has become a crucial feature as online retail continues to grow at a double-digit pace while traditional storefronts struggle with falling sales.
Members of Amazon's $99-a-year Prime service receive orders the same or the next day, depending on the item and location, and in about 30 cities, Prime Now members can get some items within an hour or two. Walmart has also revamped its shipping programme and offers free, two-day shipping for online orders of its most popular items with a minimum purchase of $35. The company also allows customers to pick up items at nearby stores for a lower price.
Walmart's renewed e-commerce push has already shown some early success, with US online sales jumping 63 percent in the latest quarter, although this includes sales through Jet.com, an e-commerce retailer Walmart purchased in 2016. But Walmart's online sales are only a fraction of Amazon's. Amazon is growing much faster and taking potential Walmart sales with it.
Walmart still lags behind Amazon in online sales. It will take bigger initiatives than Associate Delivery to make a dent in Amazon's momentum, but Walmart should be applauded for the efforts it's making.