With online markets continuously growing it is evident that they is need of the logistics which would be required to deliver products to the client on time while still maintaining profits. It should be noted that the shipping of products constitutes the major part of the products cost. This paper will highlight Walmart’s online marketing logistics, particularly on the delivery strategies the company implemented in 2007.
The rational behind Walmart’s strategy of using employees as they go home to deliver online ordered goods is profound. They take advantage of employees heading in a specific direction in a midst to cut down on costs from the “last mile” deliveries (Dolan, 2018). It is a known fact that over 20% of delivery expenses originate from last mile deliveries where the supplier and the consumer meet. Employees were to be paid extra if they volunteered for the program. The payment would be in the form of overtime. This would significantly cut on delivery costs as overtime charges are much lower compared to the logistics of operating delivery trucks (Bhattarai, 2017).
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The only flaw with the initiative is the high probability of abuse especially when it comes to proper compensation for journeys that are long. The compensation is the form of fuel, car depreciation charges, as well as other unexpected events like accidents and parking fees (Bhattarai, 2017). Though such situations are complex in resolving, simple algorithms that calculate distance, fuel consumed and amount of time spent can be used to compensate the employees. To ensure that the program continues, Walmart will have to ensure that they have good returns rates to motivate employees in the program.
Various online markets have developed various innovative means of delivering the last mile (Desjardins, 2018). Among the most innovative is that from Amazon and UPS whereby they stated that they would be using automated drones to make the deliveries. The drones would be able to achieve speeds of up to 100mph and a load capacity of up to 5 pounds (Desjardins, 2018). This would save the company 30 minutes in delivery time and approximately $50 million. On the client’s end, they would be charged as low as $1 for goods less than 5lbs per trip. The companies stated that with faster deliveries it would generate higher revenue (Desjardins, 2018). This was based on the statistics they conducted stating that over 80% of carts are abandoned due to the high cost of shipping.
References
Bhattarai, A. (2017). Walmart is asking employees to deliver packages on their way home from work. Retrieved from https://www.washingtonpost.com/news/business/wp/2017/06/01/walmart-is-asking-employees-to-deliver-packages-on-their-way-home-from-work/?utm_term=.40880abae1d8
Desjardins, J. (2018). Amazon and UPS are betting big on drone delivery. Retrieved from https://www.businessinsider.com/amazon-and-ups-are-betting-big-on-drone-delivery-2018-3?IR=T
Dolan, S. (2018). The challenges of last mile logistics & delivery technology solutions. Retrieved from https://www.businessinsider.com/last-mile-delivery-shipping-explained?IR=T
