Commentary

Walmart Testing A New Route To Deliver Groceries To Homes

Walmart yesterday announced a pilot project with Spark Delivery, a crowd-sourced delivery platform that uses independent drivers who partner with Delivery Drivers, Inc., to augment its efforts to bring grocery delivery to homes in 100 metro areas covering 40% of U.S. households by the end of this year.

“The initiative is Walmart’s latest attempt to tackle one of the biggest challenges in retail: the so-called ‘last mile’ of delivering goods to online customers. Despite having 4,700 U.S. stores within 10 miles (16 km) of 90% of the U.S. population, the Bentonville, Arkansas-based retailer is still trying to figure out how to efficiently make deliveries and has poured billions of dollars into ecommerce in recent years,” reports Reuters’ Nandita Bose.

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“Walmart has so far had mixed success with its various delivery initiatives. Reuters was first to report the end of Walmart’s delivery partnerships with Uber and Lyft and how in a separate trial the retailer struggled to get its own employees to deliver groceries to customers’ homes after completing their usual shifts of up to nine hours,” Bose adds.

Spark Delivery is already being tested in Nashville and New Orleans and is expected to roll out in a few more metro areas this year, according to Walmart’s press release announcing the initiative. Overall, its Grocery Delivery service is currently available in nearly 50 markets including Atlanta, Chicago, Denver, Miami and Seattle. 

“In the past, Walmart resisted the costly model of home delivery, instead expanding its curbside grocery pickup, a service that lets shoppers order online and then drive to a local store to pick up their items in the retailer’s parking lot," observe Kimberly Chin and Sarah Nassauer for the Wall Street Journal. “However, with rivals Amazon, Kroger and Target investing in similar home-delivery services, the company made a pivot earlier this year.”

“We’re saving customers time by leveraging new technology, and connecting all the parts of our business into a single seamless shopping experience: great stores, easy pickup, fast delivery, and apps and websites that are simple to use,” says Walmart U.S. CEO Greg Foranin in a statement. “… Using our size and scale, we’re bringing the best of Walmart to customers across the country. Spark Delivery is one way we’re exploring how to get quality groceries from our door to our customers’ doors.”

But Venture Beat’s Paul Sawers points out that “the service is very much like Amazon Flex, a delivery platform that effectively lets anyone who owns a car become a courier. Amazon Flex is focused on parcels, while Spark Delivery’s raison d’être is groceries -- but the principle is the same.

“Moreover, the big online retailers just can’t get enough drivers to fulfill demand for super-fast deliveries. A couple of months back, Amazon announced that it is looking to create a network of independent delivery fleets and it wants ‘hundreds of entrepreneurs’ to ‘start businesses’ in support of this goal.”

Yesterday, the first specially branded van to be used in that Delivery Service Partner program, which was unveiled in late June, rolled off the line at a new, $500 million Mercedes-Benz Vans Sprinter factory in North Charleston, South Carolina, John McDermott and David Wren report for the [Charlestown] Post and Courier.  “The vehicles are expected to be built and on the road within a year, said Dave Clark, Amazon’s senior vice president of worldwide operations,” they add.

“I know we initially said 5,000 vans, and I know you guys have been working like crazy so I hope you won’t be too upset with this, but we’ve decided we’re actually going to need 20,000 vans,” Clark said during the opening ceremony.

“Small business owners will work with third-party fleet management companies to order customized vans and get special leases in order to keep their startup costs low, according to the companies,” McDermott and Wren add. 

Delivery Drivers, meanwhile, the administrator of driver management for Spark, manages recruiting and other services across the country, “specializing in last-mile contractor management.” Founded in 1996 and based in Irvine, California, it offers five programs -- Legal Compliance, Accounting, Onboarding, Enrollments and Insurance -- with the pitch that partners can then “[restructure] your business to focus on marketing and technology.”

In the case of Walmart, of course, there’s an awful lot of that marketing and tech activity going on already.

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