Wal-Mart Stores Inc. has an army of associates, 1.2 million of them in the U.S., and they could be its answer to last-mile delivery.

In an effort to weaken Amazon’s grip on e-commerce, Wal-Mart has leveraged its stores and trucking fleet — assets Amazon doesn’t have. Now, the Bentonville, Ark.-based retailer wants to press its associates into making deliveries.

Shipping has been an especially volatile battleground in the online wars. Wal-Mart in January introduced free shipping for orders of at least $35. Amazon in February returned the volley, reducing its minimum order to $35 from $49. Amazon last month quietly lowered the threshold for free shipping to $25. However, it will take five to eight business days for products to be delivered.

One day ahead of its annual shareholder meeting [on Friday], Wal-Mart said it will use associates to deliver online orders to customers’ doors. The retailer is starting out small, with a test at two New Jersey and one northern Arkansas stores.

“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,” Wal-Mart said. “It just makes sense. We already have trucks moving orders from fulfillment centers to stores for pickup. Those 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.”

Driving the innovation is Marc Lore, who joined the retailer in August after Wal-Mart acquired in a $3.3 billion deal Jet.com, the company he founded, and hired him to run its U.S. e-commerce business.

Wal-Mart is using its 6,700 trucks in true omnichannel style. “Our cost to ship an item to one of our stores is 75 cents. It’s $5 or $6 to ship something to a customer’s home,” said Lore. “We launched a pickup-in-store discount. We’re saying, ‘If you want to shop smarter, you can save 5 percent.’ We’re not beating up the vendors, we’re cutting supply-chain costs.”

Lore has called free two-day shipping “table stakes,” adding, “It no longer makes sense to charge for it.”

With the cost of shipping not insignificant, Wal-Mart has been building its shipping infrastructure so it can control more of its distribution. Meanwhile, Amazon is building out its delivery capacity, as well. Last year, there was an Amazon fulfillment center within 20 miles of 44 percent of the U.S. population, up from 5 percent five years ago.

Wal-Mart, which has been criticized for paying its employees low wages, pointed out that “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. This gives our own associates a way to earn extra income on their existing drive home.”

Associates can choose the number of packages they want to deliver, the size and weight limits of the packages and the days they’re able to make deliveries after work. Packages are allocated based on minimizing the collective distance associates need to travel off of their commute route in order to make a delivery. Associates use a GPS built into a proprietary Wal-Mart app to find the quickest routes for dropping off the boxes and getting home.

 

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