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Walmart Goes Startup: Retail Giant Plans to Experiment With Crowd-Sourcing

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Walmart is no stranger to trying to do things more efficiently.  The secret of Walmart’s success has been its almost fanatical devotion to streamlining its supply chain and passing the cost savings on to consumers in the form of lower prices.

Now, the 60-year-old retailing giant is taking a page from Silicon Valley startups in its quest to further cut costs.  According to Reuters, Walmart is considering tapping into the sharing economy to streamline the delivery of products to customers who ordered online.

“I see a path to where this is crowd-sourced,” Joel Anderson, chief executive of Walmart.com in the United States, said in a recent interview with Reuters.

Wal-Mart has millions of customers visiting its stores each week. Some of these shoppers could tell the retailer where they live and sign up to drop off packages for online customers who live on their route back home, Anderson explained.

Wal-Mart would offer a discount on the customers’ shopping bill, effectively covering the cost of their gas in return for the delivery of packages, he added.

Utilizing customers to deliver packages to other Walmart customers who are on their way home is a win for all involved.  Walmart saves money, part-time delivery people cover the cost of gas for driving the same route they were going to anyway, and customers save a few bucks from their shipping costs.  The only losers in this situation: legacy shipping companies like FedEx and UPS.  Going forward, it will be interesting to watch how shipping incumbents respond to this business model innovation.  Maybe one of them will even pull an Avis (the rental car incumbent who purchased ZipCar as a hedge against disruption) and purchase a company like Zipments to make sure they don’t go the way of the dinosaurs — or Walmart’s retail competitors.

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.

Innovation

New technologies are constantly emerging that promise to change our lives for the better. These disruptive technologies give us an increase in choice, make technologies more accessible, make things more affordable, and give consumers a voice. And the pace of innovation has only quickened in recent years, as the Internet has enabled a wave of new, inter-connected devices that have benefited consumers around the world, seemingly in all aspects of their lives. Preserving an innovation-friendly market is, therefore, tantamount not only to businesses but society at large.