Walmart expands last-mile delivery service to outside businesses, opening new battlefront with Amazon

Walmart is sending its delivery drivers to businesses around the block.

The retail titan announced Tuesday that it will expand its last-mile delivery service — the final leg of an item's journey to a home or business — to other clients, offering what it called a "white label" logistics platform to outside merchants.

The announcement raises the stakes in the ever-growing e-commerce battles between Walmart and archrivals Amazon and Target. It also puts Walmart in direct competition with logistics power players FedEx, UPS and the U.S. Postal Service. (Amazon founder Jeff Bezos owns The Washington Post.)

Walmart had previously restricted its last-mile service to the delivery of its own products. The program, called Walmart GoLocal, opens new revenue streams for the company by expanding its access to inventory and increasing delivery density, the golden goose of logistics business models.

Walmart's existing last-mile ambitions saw it building out capacity for same-day delivery, the latest frontier of the shipping wars as competitors try to catch up to Amazon's Prime service. In three years, Walmart developed same-day delivery for more than 160,000 items from more than 3,000 stores that can cover 70% of the U.S. population.

That still makes it a distant second to Amazon, though, retail experts say. And it trails far behind UPS and FedEx as a pure-play logistics firm.

"This seems to be an attempt to make sense of the fact that they can't deliver efficiently from their own stores, which is where most of their goods are delivered from," said Mark Cohen, director of retail studies at the Columbia University Business School. "They're trying to create some sort of UPS-like entity to deliver goods from other retailers."

He added, "They can only sell in enormous volumes things that they carry from their own stores, which limits what they can sell. That's why this horse race they're in will never be a race. Amazon is a marketplace, whereas Walmart is just a store."

Stocks in the big-box retail and e-commerce space were mostly flat on the news. By late morning, Walmart dropped 0.9%. Target, which controls its own last-mile service Shipt, was down 0.6%. Amazon climbed 1.3%.

Walmart GoLocal will expand the company's Spark Driver program, which enlists gig workers to make deliveries of Walmart products, to other business rather than solely to Walmart products. Tom Ward, the company's senior vice president for last-mile deliveries, said in a Tuesday call with reporters that Walmart would consider using Walmart employees, more gig workers and even drones to fulfill orders.

Walmart GoLocal already has agreements with national retail clients, the company said in a news release, though it declined to name them. Ward told reporters that Walmart envisions a service that could deliver cupcakes from local bakeries as easily as it could car parts from national retailers.

Abha Bhattarai contributed to this report.