Walmart to start delivery service for other sellers

Retailer aims to expand sources of profits, revenues beyond its core businesses

NEW YORK — Walmart said Tuesday it will start farming out its delivery service, using contract workers, autonomous vehicles and other means to transport rival retailers’ products directly to their customers’ homes as fast as in just a few hours.

The nation’s largest retailer said it will dispatch contract workers from its Spark delivery network, which was launched in 2018, to merchants’ stores to pick up items and then take them to shoppers. Over the past year, Walmart has doubled Spark’s coverage to more than 500 cities nationwide, providing access to more than 20 million households.

Walmart, based in Bentonville, Arkansas, aims to tap into its ties with local communities, particularly businesses in rural areas that have struggled to provide their own delivery services.

The strategy will pit Walmart against delivery services run by the likes of Uber and Doordash. And it comes as Walmart moves to expand its sources of profits and revenues beyond its core retail businesses. It echoes Amazon’s diversification move with its Amazon Web Services cloud computing unit, which the online behemoth built for itself and now sells to other businesses.

Walmart said the delivery service, Walmart Golocal, has already signed a number of deals with national and small-business clients, although it did not name them. It declined to offer figures on the investment or financial targets for the service. Deliveries to the other businesses will begin in the next few months.

The moves are happening as the pandemic has deepened shoppers’ appetite for speedier deliveries, putting more stress on smaller retailers that can’t meet their expectations.

Shoppers ordering anything from cupcakes to gadgets at their local stores won’t know that Walmart is involved. They buy the goods on their local store website and then the store activates the Walmart Golocal delivery. Walmart said it will be a white-label service, so deliveries will not be made by Walmart-branded vehicles.

“This is a smart tactic that has more upside than downside,” said Jason Goldberg, chief commerce strategy officer at Publicis Communications, part of Publicis Groupe SA.

Goldberg noted that the more deliveries Walmart can make, the lower the costs and the more profitable each delivery becomes. By working with different businesses with different needs, it can also manage peaks in ordering. Walmart will have an advantage in the competition for gig workers because it can offer more shifts to those looking for flexibility.

The only downside is that Walmart is potentially giving up business to some of the local players, Goldberg said. For example, a customer may prefer buying from the local bakery and having a cake delivered in the next few hours, rather than picking one up at Walmart, he said. But Goldberg said he believes the benefits from having a broader deliver network outweighs those small competitive disadvantages.