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Walmart begins testing associate delivery service

03 June 2017

Walmart is testing a delivery service using its own store employees, who will deliver packages ordered online while driving home from their regular work shifts.

Walmart's secret weapon in its ongoing battle with Amazon may be something it already has in abundance: store employees.

The test started small.

This new program could be subject to abuse if Walmart does not give compensation to workers for the complete cost of the delivery, the expenses of gas, depreciation to their vehicle and possible problems such as tickets, parking expenses and accidents, said one labor professor in NY.

As a result, investors have been drawn to Walmart's shares.

"It just makes sense", said Walmart E-Commerce chief Marc Lore in a blog post.

Officials believe the service will speed up the delivery time on items and help cut costs by utilizing its 4,700 stores and 1.5 million employees.

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. To take part, the employees will have to pass a background and vehicle check. The retailer assigns deliveries to associates in a way created to minimize the distance they collectively need to travel.

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Amazon, the e-commerce giant delivers orders at your doorstep in a very convenient and smooth way. The app provides navigational assistance, as well.

Walmart says its new delivery venture is a win-win, providing faster delivery as well as cutting costs. At the time, Walmart said the purchase of Jet was "another jolt of entrepreneurial spirit being injected into Walmart". A number of lowly paid workers across the USA now supplement their incomes by working in the gig economy - like driving for Uber or Lyft, for example. The set-up is allowing many orders to be delivered next day, and associates appreciate the opportunity to earn more money, he said. And yes, if they choose to participate, they are compensated for this unorthodox additional duty. Under the new plan, e-commerce goods would be shipped by Walmart's fleet of trucks to stores, then the last mile by employees. Google Express and Amazon Prime Now use local couriers to route their deliveries, for example (and have been sued for classifying workers as independent contractors and the low wages paid).

By comparison, Amazon (AMZN, Tech30) has rolled out same-day delivery services across much of the country.

"We don't think about this from a gig economy standpoint", explains Walmart spokesperson Ravi Jariwala.

But what this comes down to is an incredibly smart square footage play by Walmart that, once implemented across their USA and/or global locations, would immediately make them the largest distribution network of consumer goods.

Walmart's advantage, too, is its stores.

"Together, we're building a new Walmart", McMillon told more than 14,000 associates from across the USA and around the world in Bud Walton Arena at the University of Arkansas in Fayetteville, Ark.

There are now 4700 locations around the country, putting Walmart within 10 miles of 90% of the US population. Plus, Walmart can smartly route shipments to the closest store to its customers.

Walmart begins testing associate delivery service