Wal-Mart Taps Employees for Quick Deliveries to Take on Amazon

(Bloomberg) -- Wal-Mart Stores Inc. is testing a program that sends store employees to deliver online orders at the end of their shifts, a new push by the world's biggest retailer to use its large physical footprint to match Amazon.com Inc.'s convenient options for web purchases.

Workers can opt in to earn extra money by making deliveries using their own cars. They're assigned packages based on where they live so the route aligns with their commute home, the company said Thursday in a blog post. Wal-Mart didn't specify how the employees will be compensated. The test began at three locations in Arkansas and New Jersey.

Wal-Mart is tapping into its 4,700 U.S. stores and more than a million retail employees as it seeks to redefine itself in an age of e-commerce dominated by Amazon, which offers delivery of some products in as little as an hour in some cities. Online spending will increase by 16 percent this year -- more than four times the pace of overall retail -- to reach $462 billion, according to EMarketer Inc.

About 90 percent of the U.S. population lives within 10 miles of a Wal-Mart, and the company is using those locations as shipping hubs to compete with Amazon on the last mile of delivery -- the most expensive part of getting goods to customers. By using existing workers in their own cars, Wal-Mart could create a vast network with little upfront cost, similar to how Uber Technologies Inc. created a ride-hailing service without owning any cars.

"Imagine all the routes our associates drive to and from work and the houses they pass along the way," said Marc Lore, who took over Wal-Mart's e-commerce operation last year after the retailer purchased his startup, Jet.com, for $3.3 billion. "This test could be a game-changer."

Many online orders in tests have been delivered overnight using store employees, Lore said, showing how the initiative could also be used to narrow delivery times.

The lines between internet and brick-and-mortar commerce are blurring as retailers -- including Amazon -- try to accommodate a variety of shopping preferences. Bentonville, Arkansas-based Wal-Mart offers free two-day delivery on millions of items to compete with Amazon's standard delivery time. It also lets customers buy groceries online and pick them up at stores and offers discounts to online shoppers who pick up items at stores rather than having them delivered.

Amazon, meanwhile, has stepped up its experimentation with physical locations. It's slowly opening physical bookstores in big cities around the U.S., which double as showrooms for Amazon gadgets like its Kindle readers and Echo voice-activated speakers. The company opened two drive-in grocery pickup kiosks in its hometown of Seattle earlier this month, its first attempt to match the click-and-collect options rolled out by Wal-Mart and other big-box competitors.

To contact the reporter on this story: Spencer Soper in Seattle at ssoper@bloomberg.net.

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz