Walmart Offers Financial Incentives for Independent Delivery Drivers

By Siddharth Cavale
NEW YORK (Reuters) – Walmart (NYSE:WMT) is set to introduce new financial incentives for independent delivery drivers to enhance their engagement in picking up online orders from U.S. stores and delivering them to customers during the holiday season, as reported by Reuters.

This strategy aims to boost sales among upper-income households while competing with e-commerce rival Amazon.com (NASDAQ:AMZN), which has been delivering more everyday essentials quickly.

Josh Havens, spokesperson for Walmart, noted that the company will offer additional delivery incentives and increased earning opportunities for existing drivers, though specific details were not disclosed.

Walmart relies on a decentralized network of thousands of freelance drivers who use the Walmart-designed app, Spark Driver, on their cellphones.

> “Spark Driver is very important to Walmart because it helps grow e-commerce sales and Walmart Plus subscriptions,” said Arun Sundaram, Senior VP at CFRA Research.

Walmart’s global e-commerce sales surpassed $100 billion in 2023, with Chief Financial Officer John David Rainey expecting U.S. e-commerce to achieve profitability within the next couple of years. Walmart focuses on improving e-commerce margins by delivering products directly from stores using Spark Driver.

VARYING PAY

Earnings for Spark Drivers fluctuate based on order size and delivery distance. Drivers earn more for challenging deliveries, such as heavy items or deliveries to apartments.

According to Gridwise, a data-analytics firm, from October 2023 to September 2024, Spark Drivers earned an average of $21.90 per hour and $12.26 per trip. However, some drivers report inconsistencies in payouts.

> “There doesn't seem to be any logic behind how they estimate driver payouts before tips,” noted Joseph Wilson, a Spark Driver since 2022.

To enhance the appeal of its delivery service, Walmart has halved the annual fee for Walmart Plus membership ahead of the holiday season. Members enjoy unlimited free same-day deliveries on orders over $35 for an annual fee of $49 until December 2.

Walmart Plus is projected to grow from 29.2 million members in 2023 to 32 million by year-end, according to Emarketer. Meanwhile, Amazon has also targeted Walmart with a $99.99 annual grocery delivery service for Prime members.

Quick store-to-home deliveries have helped Walmart grow its market share among upper-income households subscribing to Walmart Plus. Increased subscribers can lead to higher advertising revenue from product suppliers through Walmart Connect, the retailer’s media business that generated approximately $3 billion in 2023.

Amidst these developments, Spark Driver experienced a data breach in February harming drivers' personal information, including Social Security numbers. Walmart has since implemented stricter password policies and ID verification measures.

Walmart executives are expected to reveal their holiday season outlook alongside third-quarter results on November 19.