Walmart offers holiday bonuses for drivers to compete with Amazon
US retail giant aims to attract customers from Amazon and boost Walmart subscriptions this holiday season.
Walmart plans to offer new financial incentives to independent delivery drivers to enhance its holiday season logistics. The retailer revealed to Reuters that these bonuses encourage drivers to collect orders directly from U.S. stores and deliver them to customers. This move reflects Walmart’s commitment to improving delivery speed and reliability while staying competitive during the busy shopping season. The incentives are part of Walmart’s broader strategy to attract more customers and boost holiday sales, especially for one-day and same-day delivery.
This initiative is vital to Walmart’s strategy to increase its appeal among higher-income households and capture a larger retail market share, where it faces intense competition from e-commerce giant Amazon. By providing faster, more convenient delivery options, Walmart aims to attract customers who prioritize quick access to everyday essentials—a service that Amazon already dominates with its one- to two-day delivery model.
Arun Sundaram, senior vice president at CFRA Research, emphasized the importance of Spark Driver to Walmart, noting that it plays a crucial role in boosting e-commerce sales and driving subscriptions for Walmart’s membership program, Walmart Plus.
“Spark Driver is very important to Walmart … because it helps grow e-commerce sales and Walmart Plus subscriptions,”
In 2023, Walmart’s global e-commerce sales surpassed the $100 billion mark, highlighting the retailer’s continued growth in the online shopping space. In June, Chief Financial Officer John David Rainey stated that the company expects its U.S. e-commerce division to become profitable within the next two years, marking a significant milestone in its digital transformation. As part of its strategy to achieve this, Walmart focuses on improving e-commerce margins by enhancing its fulfilment processes. The retailer plans to accomplish this by increasing the use of Spark Driver, its independent delivery network, to transport goods directly from Walmart stores to customers’ homes. This approach aims to reduce costs while providing faster and more efficient deliveries.
Walmart Intensifies Competition with Amazon
Walmart reports that Spark drivers earn an average of $24.55 per hour, slightly higher than the $18-$25 per hour that Amazon drivers make. However, according to ZipRecruiter data, Amazon’s Delivery Service Partners earn a significantly higher average of $38 per hour. This difference highlights the two retail giants’ varying pay structures and delivery models, with Walmart leveraging its independent driver network to remain competitive.
The competition between Walmart and Amazon has intensified, especially in the grocery and logistics. In recent months, Amazon has introduced new benefits for Prime members, such as grocery discounts and EV charging deals, to strengthen its market position. Meanwhile, Walmart has responded by expanding the perks of its Walmart+ membership, offering additional benefits like fuel savings, free shipping, and exclusive discounts, all aimed at attracting and retaining more customers. As part of its strategy, Walmart has set an ambitious goal to grow its Walmart+ membership base to 32 million by the end of the year, according to Emarketer.
Data Security
According to Reuters, Spark Driver experienced a data breach in February, where hackers accessed personal information from driver accounts, including Social Security numbers.
In response to the breach, Walmart spokesperson Havens explained that the retailer has enhanced security and improved its holiday offerings. Walmart has streamlined its incentive system for drivers and introduced more robust safety measures, such as stricter password requirements and the use of selfies for login verification. Walmart is also piloting physical ID checks at select stores to protect driver information further.
