Wal-Mart announced Thursday (June 1) it has for the past month tested a final mile service for online orders of general merchandise from Jet.com and Walmart.com using store employees to make the deliveries on their way home from work.
One store in Northwest Arkansas and two and in New Jersey were used to conduct the tests for about four weeks. They delivered dozens of packages to customer homes, most often the day after they were ordered online, according to Ravi Jariwalla, corporate spokesman for Walmart U.S. e-commerce.
Jariwalla did not say how much the employees earn for opting into this service, but he did say it’s added pay they can earn while driving home on their normal route. The employees have the choice to participate, but everyone who is chosen for the final mile tasks must pass a background check and their driving record is also reviewed.
Employees may choose the days they want to deliver, the size and weight of the packages and how many deliveries they want to make. Wal-Mart has created an algorithm that overlaps employee addresses with delivery destinations on customer orders. The company said an employee will not be asked to drive out of their way to deliver a package.
“Think about where our associates live and it’s very close to where the orders are coming from creating a web optimized for final mile,” Jariwalla said.
He said Wal-Mart is using its trucks to move the online orders from fulfillment centers to the store, then using participating employees to run the final delivery leg. He said it’s taking costs and time out of the supply chain and employees are able to earn extra money in the process.
Final mile is the most expensive leg of the the supply chain and Jariwala said the company has made dozens of deliveries and the majority of the orders arrive the next day, even faster than the two-day guaranteed free delivery on orders over $35.
Just last year Wal-Mart announced it was piloting the use of Lyft and Uber to facilitate grocery delivery in select markets. Jariwalla said those test are ongoing, and the new final mile option is for general merchandise only.
“Associates are fully in control of their experience. … We allocate packages based on minimizing the collective distance they need to travel off of their commute to make a delivery,” he said.
When asked about how long it might take for the retailer to roll out this service, he said they are still in the trial phase and it’s too early to discuss a roll out. Given Wal-Mart’s store footprint of almost 4,700 stores and 1.5 million employees combined with the 10-mile proximity most customers have to a Walmart store, it’s possible the idea of employee delivery could help with the final mile dilemma faced by retailers.
“The response from our associates and customers has been great. An unexpected benefit for our associates is that many of them have found quicker routes home thanks to the GPS built into the app,” Jariwalla said.
He said the company continues to test different processes as it strives to offer customers savings and convenience. He said the pick-up discount recently announced is about saving customers’ money, but for others the home delivery is about convenience. Walmart is uniquely positioned to offer this service, Jariwalla said.
“Wal-Mart feels very different on June 1 than it did on January 1. … Walmart U.S. e-commerce CEO Marc Lore will talk more about this final mile delivery test,” he said.
Following is the complete – and unedited – message Lore posted Thursday.
Leveraging our Strengths and Assets to Serve Customers in New Ways: Walmart Begins Testing Associate Delivery
The best innovations are the ones that truly help customers save time and money. We’re doing a lot of both. Online Grocery Pickup and two-day free shipping are saving people tons of time, and our new Pickup Discount is using our massive fleet of trucks to get online orders to stores where customers can pick up items for an additional discount and save even more money.
Now, our latest test is taking this another step further and leveraging one of our greatest assets – our associates – to get online orders to customers’ doors. Why is that a big deal? 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.
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. The best part is this gives our own associates a way to earn extra income on their existing drive home.
Associates are fully in control of their experience. If they don’t want to participate, they don’t have to. If they choose to opt in, we’ve built technology that allows them to set preferences. 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.
Walmart has strength in numbers with 4,700 stores across the U.S. and more than a million associates. Our stores put us within 10 miles of 90% of the U.S. population. Now imagine all the routes our associates drive to and from work and the houses they pass along the way. It’s easy to see why this test could be a game-changer.
We’re starting small with three test stores – two in New Jersey and one in northwest Arkansas – but the response from associates and customers has been great. Many orders are being delivered the next day, and associates love having the option to earn more cash while doing something that’s already part of their daily routine. An unexpected benefit is they’re finding quicker routes home thanks to the GPS built into our proprietary app.
This last-mile innovation is one of a kind. Unlike crowdsourced delivery, where the driver has to travel (often out of the way) to pick up the package, then drive the full distance to deliver it, our associates are starting at the same place as the packages. 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.
What I’m most proud of is how all areas of Walmart, from e-commerce to store operations to supply chain, came together to innovate rapidly for our customers – and in a way that puts our associates in control.
I’m sure you can imagine how we can leverage these types of last-mile innovations in the future to deliver items offered in our stores to customers the same day. I’m excited to continue exploring more ways to bring our digital and physical strengths together to serve customers.