Walmart will introduce new financial incentives for independent delivery drivers to collect online orders from U.S. stores and deliver them to customers during the holiday season, the retailer told Reuters.
This initiative is part of Walmart’s strategy to boost sales among higher-income households and compete with e-commerce giant Amazon.com, which delivers everyday essentials to shoppers within one or two days.
Walmart spokesperson Josh Havens stated that the company will provide additional incentives and earning opportunities for its current delivery drivers but did not disclose specific details.
Walmart in the U.S. relies on a flexible network of thousands of freelance drivers who use Walmart’s custom-designed app, Spark Driver, on their mobile devices.
“Spark Driver is vital for Walmart,” said Arun Sundaram, senior vice president at CFRA Research, “as it supports e-commerce growth and Walmart Plus memberships.”
In 2023, Walmart’s global e-commerce revenue exceeded $100 billion, and Chief Financial Officer John David Rainey indicated in June that the U.S. e-commerce division could see its first profit within the next year or two. Rainey previously noted that Walmart is focused on enhancing e-commerce margins by delivering directly to customers’ homes from stores using Spark Driver.
Spark Driver earnings depend on factors like order size and distance. Deliveries to apartments or heavy items, such as furniture, result in higher pay, according to Walmart. Gridwise, a data analytics company that tracks driver earnings, reported that from October 2023 to September 2024, Spark Drivers made an average of $21.90 per hour and $12.26 per trip. However, Joseph Wilson, a Spark Driver from Bloomington, Indiana, who joined in 2022, mentioned that payouts can be unpredictable.
“There doesn’t seem to be a clear logic behind payout estimates before tips,” he said. “I might receive $20 for a seven-item order or $7 for a 50-item order, which is really frustrating.”
To attract more customers to its delivery service, Walmart recently reduced the annual fee for Walmart Plus memberships by 50% ahead of the holiday season. Walmart Plus members receive unlimited free same-day deliveries on orders over $35. The membership is available for $49 until Dec. 2. According to research firm eMarketer, Walmart Plus membership is expected to reach 32 million by the end of the year, up from 29.2 million in 2023.
Meanwhile, Amazon is competing with Walmart by offering a fast grocery delivery add-on service for Amazon Prime members at $99.99 annually. Amazon Prime membership costs $139 per year and has approximately 180 million U.S. members, according to Consumer Intelligence Research Partners.
Walmart reported in February that faster store-to-home deliveries helped increase its market share as more higher-income households subscribed to Walmart Plus.
With a growing subscriber base, Walmart has greater potential to increase advertising revenue from consumer brands promoted on Walmart.com, Sundaram noted. Walmart sells advertising space through its profitable Walmart Connect media business, which generated around $3 billion in 2023.
In February, Walmart experienced a data breach affecting Spark Driver accounts, exposing personal information, including Social Security numbers. Two drivers reported to Reuters that scammers used this data to create fake profiles and impersonate drivers.
Walmart spokesperson Havens stated that the company has simplified holiday incentives and enhanced security features, including stricter password rules and login selfies. Walmart is also piloting physical ID verification at select stores.
Walmart executives will share their holiday season outlook with third-quarter results on Nov. 19.
