SAN FRANCISCO -- Walmart is considering a radical plan to have store customers deliver packages to online buyers, a new twist on speedier delivery services that the company hopes will enable it to better compete with Amazon.com Inc. (AMZN).
Tapping customers to deliver goods would put the world's largest retailer squarely in middle of a new phenomenon sometimes known as "crowd-sourcing," or the "sharing economy."
A plethora of start-ups now help people make money by renting out a spare room, a car, or even a cocktail dress, and Walmart would in effect be inviting people to rent out space in their vehicle and their willingness to deliver packages to others.
Such an effort would, however, face numerous legal, regulatory and privacy obstacles, and Walmart executives said it was at an early planning stage.
Walmart Stores Inc. (WMT) is making a big push to ship online orders directly from stores, hoping to cut transportation costs and gain an edge over Amazon and other online retailers, which have no physical store locations. Walmart does this at 25 stores currently, but plans to double that to 50 this year and could expand the program to hundreds of stores in the future.
Walmart currently uses carriers such as FedEx Corp. (FDX) for delivery from stores -- or, in the case of a same-day delivery service called Walmart To Go that is being tested in five metro areas, its own delivery trucks.
"I see a path to where this is crowd-sourced," Joel Anderson, chief executive of Walmart.com in the U.S., said in a recent interview with Reuters.
Walmart 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.
Walmart 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.
"This is at the brain-storming stage, but it's possible in a year or two," said Jeff McAllister, senior vice president of Walmart U.S. innovations.
Indeed, the likelihood of this being broadly adopted across the company's network of more than 4,000 stores in the U.S. is low, according to Matt Nemer, a retail analyst at Wells Fargo Securities.
"I'm sure it will be a test in some stores," he added. "But they may only keep it for metro markets and for higher-priced items."
Start-ups such as TaskRabbit and Fiverr already let individuals rent out their time and expertise to companies and people looking for small jobs to be completed.
Zipments was founded in 2010 as a crowd-sourced delivery network that allowed anyone over 18 years old with a vehicle, a text-enabled phone, and a PayPal account to bid on courier services for local businesses.
Such online match-making businesses often push legal boundaries -- and a Walmart crowd-sourced delivery program would be no different, according to Nemer.
Online packages delivered by customers may never reach their destination, either through theft or fraud, the analyst said.
Such a crowd-sourced delivery service may not be as reliable as FedEx or United Parcel Service Inc. (UPS), which have insured drivers, he added.
"You are comfortable with a FedEx or UPS truck in your driveway, but what about a stranger knocking on your door?" Nemer said.
While Zipments started out with a pure crowd-sourcing approach, the company now does more screening of drivers before allowing them to be part of its delivery network, Chief Executive and co-founder Garrick Pohl said in an interview. It now serves big cities including New York and Chicago.
Theft, fraud and late deliveries have never been a problem, but insurance and licenses were an obstacle, Pohl explained.
Drivers often need personal liability insurance to cover package delivery activities. Cargo insurance is also needed. Zipments self-insures this risk up to $250, but the firm encourages its couriers to buy additional coverage for higher-value packages, Pohl said.
In some areas, like downtown Chicago, people also need a courier license to deliver things, he added.
"Zipments now helps people get all these things set up before allowing them to deliver goods," Pohl said.
Still, he said the issues are not insurmountable, citing pizza restaurants, which have used part-time drivers to deliver pies for years.
"It's a great solution for large retailers like Walmart," Pohl said. "We'd like to see them move quicker, but it's great that they are considering it."
Zipments is trying to provide such services to retailers, although Pohl declined to say which companies the start-up is talking to about this.
Reporting by Alistair Barr and Jessica Wohl; Editing by Jonathan Weber, Martin Howell and Leslie Gevirtz.
The 8 Retailers That Will Close the Most Stores in 2013
Walmart's 'Radical' Plan to Deliver Customers' Online Purchases
Forecast store closings: 200 to 250 Number of U.S. stores:1,056 One-year stock performance: -36.8%
The holiday season was rough for Best Buy (BBY). Same-store sales declined by 1.4% year-over-year, with international stores posting a 6.4% decline while U.S. same-store sales were flat. Company-wide, the electronics retailer reported that holiday revenue had declined to $12.8 billion from $12.9 billion the year before. In the most recent completed quarter, during which same-store sales declined 4.3%, the company reported a loss of 4 cents per share.
Best Buy has been plagued by the trend of "showrooming" -- customers using stores to get real-world looks at products, then purchasing them online. Speculation persists that former chairman and founder Richard Schulze may buy the company and take it private.
Forecast store closings: Kmart 175 to 225, Sears 100 to 125 Number of U.S. stores: 2,118 One-year stock performance: 8.8%
Both Sears and Kmart have been going down the tubes for a long time, steadily losing their middle-income shoppers to retailers such as Walmart (WMT) and Target (TGT). Sears Holding's (SHLD) same-store sales have declined for six years. In the most recent year, same-store sales at the namesake franchise fell by 1.6% and at Kmart by 3.7%.
The company is already in the process of downsizing its brick-and-mortar presence. In 2012, Sears announced it was shutting 172 stores. CEO Lou D'Ambrosio is leaving in February, to be replaced by Chairman and hedge-fund manager Edward Lampert, who has minimal operating experience in retail management.
Forecast store closings: 300 to 350 Number of U.S. stores: 1,100 One-year stock performance: -53.6%
J.C. Penney has been going through a rough stretch. In the most recent quarter, same-store sales fell by 26.1% year-over-year. Even its Internet sales have taken a turn for the worse, falling 37.3% in the third quarter, compared to the prior year.
The retailer's current troubles began after former Apple (AAPL) retail chief Ron Johnson took the helm and launched an ambitious transformation plan that, among others things, aimed to wean customers off of heavy discounting and coupons, and simply give customers low prices right off the bat. Instead, retail strategists and analysts say, Johnson's vision has created confusion among customers and inhibited any potential turnaround.
Forecast store closings: 125 to 150 Number of U.S. stores: 1,114 One-year stock performance: 50.7%
Office Depot's (ODP) troubles can be traced back to years of competition against OfficeMax (OMX) and Staples (SPLS), as well as big-box retailers like Walmart. All three major office supply chains suffered from reduced business activity during the recession, as well as the rise in popularity of online retailers such as Amazon. The company's North American division reported an operating loss of $21 million in the third quarter of 2012. Office Depot plans to relocate or downsize as many as 500 locations and close at least 20 stores. In the third quarter of 2012, the company closed four stores in the United States, and same-store sales were down by 4 percent year-over-year.
Forecast store closings: 190 to 240, per company comments Number of U.S. stores: 689 One-year stock performance: 8.95%
The shift by customers away from print books toward digital books has hurt Barnes & Noble (BKS). Same-store sales during the nine-week holiday season fell by 8.2% year-over-year. The bookseller has tried to offset the declines in physical book sales with its Nook e-book reader, but sales of that device fell 13% compared to the previous year. The company has already been reducing store count over the past several years. In a recent interview with The Wall Street Journal, the head of the retail group at Barnes & Noble said he expected the company to have just 450 to 500 stores 10 years from now.
Forecast store closings: 500 to 600 Number of U.S. stores: 4,471 One-year stock performance: -2.2%
In November, with the holiday season just getting into full swing, GameStop (GME) announced it would close 200 stores in 2013. The video game retailer, hurt by growth in mobile gaming, which came at the expense of traditional console gaming, saw year-over-year revenue decrease 4.6%, and comparable-store sales fall by 4.4% for holiday period. For the third quarter of 2012 (the most recent for which numbers have been released), gross profits fell for GameStop's three core product segments: new hardware, new software and used products.
Forecast store closings: 150 to 175 Number of U.S. stores: 872 One-year stock performance: 80.8%
OfficeMax, like rival office-supply stores such as Staples and Office Depot, has been hit hard by both online competition and falling sales for technology products such as personal computers. In the third quarter of 2012, OfficeMax reported that same-store sales in the U.S. fell by 2.6%. Midway through the fourth quarter of 2011, the company announced that it would close 15 to 20 stores every year for the next five years. In addition, the company is in the process of downsizing by moving into smaller locations.
Forecast store closings: 450 to 550 Number of U.S. stores: 4,412 One-year stock performance: -68.1%
Earlier this month, RadioShack's long-term prospects took another hit when its partnership with Target ended after the two retailers were unable to design a mutually beneficial deal. RadioShack had operated mobile kiosks at 1,500 Target locations across the country.
The company recorded an operating loss of nearly $60 million in the third quarter of 2012, when same-store sales dropped by 1.6% year-over-year and revenue fell by 3.8%. In 2010 and 2011, the company closed 2.2% of its existing locations -- more than 120 stores in all.