Dive Brief:

• Walmart recently began testing an order delivery system that pays workers extra to drop off goods on their way home from work, according to The Washington Post. Three stores have tested the voluntary system, two in New Jersey and one in northwest Arkansas.
• Labor experts say the system could work against employees unless the company compensates them for gas mileage, wear and tear on their car, and incidentals like parking tickets. In addition, Walmart would need to pay workers a fair wage. They also say the program won’t be voluntary for many workers, considering the company’s low pay.
• Workers can sign up to make as many as ten deliveries per day, and can set limits on the size and weight of items. A company spokesman declined to say what the company bases its pay on and how much workers are paid for the service.

Dive Insight:

Walmart’s new delivery pilot, which it announced during last week's shareholders' meeting, is an interesting cross between traditional retail employment and the gig economy. The effort could give the company an edge in last-mile delivery, which is notoriously difficult to execute, but it could become a liability if Walmart doesn’t adequately train and compensate its employees.

Using existing workers to deliver orders has clear savings advantages for Walmart. The initiative doesn’t require that much extra work for employees who volunteer, according to Walmart. A company spokesman told The Post that 90% of Americans live within ten miles of a Walmart store, and that many workers are already heading by delivery points on their way home from work.

This characterization, however, downplays the risk involved. Workers are often tired at the end of a long shift, and making multiple deliveries on top of this could increase the risk of a mistake, be that a mishandled package, a late delivery, or worse, an accident. It’s unclear what, if any, additional training workers receive. As labor experts interviewed by The Post point out, the deal could be a losing one for employees if they aren’t compensated for mileage, additional insurance, wear and tear and incidentals on top of their additional pay.

Failing to adequately compensate workers could backfire on Walmart. Uber has faced a public backlash for its underpayment of workers, while Instacart damaged its relationship with workers by meddling with their tipping system. Overall, public sentiment and legal decisions are increasingly siding with the independent contractors that comprise the gig economy.

All of which isn’t to say that Walmart’s new model couldn’t work on a larger scale. Done right, it could give the company some distinct advantages in grocery by having experienced employees deliver fresh food to customers’ doorsteps. However, before it expands the service, Walmart needs to formalize the model and make it transparent for employees and customers.