In a novel idea that doesn’t involve the adoption of whizz-bang technology, Walmart has identified a new way that customer-facing businesses can compete with the likes of e-commerce giants such as Amazon: get workers to deliver products on their way home from work.
The idea may seem crazy at first. Wouldn’t customers coincidentally need to be on staff members’ way home? And how could staff possibly meet the needs of scores of customers during their commute?
But a closer look at Walmart’s situation indicates the idea could have legs, offering other CEOs in the B2C realm some food for thought.
Walmart, of course, has strength in numbers. It has 47,000 stores across the U.S. and more than 1 million staff, though it also has much bigger customer base to serve.
“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.”
In a blog post yesterday, the CEO of its e-commerce operations, Marc Lore, said he was testing the idea at three stores—two in New Jersey and one in northwest Arkansas.
More broadly, however, Walmart’s vast store network physically puts the company 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,” Lore said. “It’s easy to see why this test could be a game-changer.”
Staff, he said, would be incentivized with extra earnings, though Walmart hasn’t said how much they’d get paid for making deliveries. They wouldn’t be forced to participate and could choose how many packages they wanted to deliver, their size and which days they’d like to make deliveries after work. Walmart also would allocate packages based on minimizing the distance staff would need to divert from their usual route home.
“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,” Lore said.
Walmart’s move comes as American retailers come under attack on another front. German discount retailers Aldi and Lidl are planning fresh assaults on the market that is forcing CEOs of local companies to think of new ways to differentiate their offering.
According to a Bain report released this week, the consultancy predicted that the deep discount segment in the U.S. will growth by 8-10% annual over the next several years, or five-times the rate of traditional grocers. “Incumbents need to be on the forefront of this this change, or they risk losing $30-45 billion of incremental sales growth to hard discounters by 2025,” Bain concluded.
Other companies thinking of adopting elements of Walmart’s test should consider these four factors:
1. Are staff willing to make deliveries at a cheaper rate than the cost of postage?
2. How much added value will same-day delivery offer customers?
3. Does the company have an appropriate staff-to-customer ratio to make it work? If not, is there a way to limit the service to certain customers or products?
4. Is the company covered for potential workplace liabilities that could arise in the event of staff injury?
Lore, himself, will be bearing some of these things in mind during the test. And the whole idea, of course, could be rendered obsolete, should drone delivery methods overcome legal and technical challenges.
But that’s for another day.