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EXCLUSIVE-Low tips, long waits: DoorDash takes on drivers' Walmart gripes

NEW YORK/CHICAGO, March 22 (Reuters) - Third-party delivery firm DoorDash Inc is taking steps to address what it says are frustrations from independent drivers toting Walmart Inc merchandise and grocery orders, including low customer tips, the company confirmed to Reuters.

The world’s largest retailer in recent years has bolstered its partnerships with same-day third-party courier firms, including DoorDash, to reach consumers in and around scores of U.S. cities and better compete with Amazon.com Inc. The push came as Walmart ended initiatives to use Uber Technologies Inc and Lyft Inc drivers, and struggled with using its own employees, to deliver packages.

On Feb. 26, DoorDash surveyed its more than 1 million independent drivers, asking them to share “experiences” about deliveries for Walmart. “We heard your feedback. Make Walmart orders better,” the survey says, according to a version Reuters has seen that DoorDash confirmed as authentic.

As DoorDash expands beyond its urban restaurant roots to the delivery of everything - from groceries to gardening tools - across the country, it has run into etiquette issues. Americans who are used to tipping for burgers or burritos do not always think to tip for delivery of household goods or pet food. After all, they do not tip for postal, UPS or Amazon deliveries.

CEO Doug McMillon last month said delivery is key to its Walmart+ subscription program, launched in September. The program, which costs $98 a year, offers unlimited grocery and merchandise delivery on orders over $35 from Walmart stores.

“Logistics and delivery will continue to be a bit of a pain point for Walmart because they view it as a place where they could potentially reduce costs,” said Chad Oviatt, director of investment at Walmart shareholder Huntington Private Bank.

Partnering with Walmart has helped DoorDash take market share from rivals including Grubhub Inc and tap into new pockets of demand for delivery in suburban areas, where many Walmart stores are located.

But some DoorDash drivers complain of heavy loads and long waits for picking up parcels at stores. Customer tips are another sore point, especially for drivers who are used to getting bigger tips on restaurant orders, several people said.

After her day job, DoorDash driver Kat Ensey, 53, makes money delivering sandwiches and sodas outside of Chicago. Bringing Walmart orders to shoppers’ homes is less profitable, she said. Ensey, standing 5 feet-2-inches tall, recalled once hauling 13, 30-pound bags of soil from her car through a muddy yard to a Walmart customer’s back patio. DoorDash paid her $4 for the delivery. The customer did not tip.

Until last fall, Walmart’s app, which takes customers’ delivery orders, did not allow shoppers to include tips up front. Instacart Inc - a third-party service that handles deliveries for Kroger Co and other grocers - includes a pre-delivery tip of $2, and Amazon.com Inc’s Whole Foods and Amazon Fresh include a $7 tip. Customers can then change the amounts.

DoorDash said it approached Walmart last year about allowing customers to add a tip to their order before they finalize a purchase. A spokeswoman for Walmart said this was “a great idea” and changed its app in October to allow online shoppers to tip before they pay for their order.

Since that move, she said, 75% of Walmart shoppers allocate tips. But the DoorDash spokeswoman said the company did not finish updating its own app until late February, so drivers could not see tips before deciding to accept a delivery.

‘CHANGES ON THE HORIZON’

While DoorDash regularly checks in with its drivers about various issues, its February survey focused entirely on Walmart, asking recipients to score how likely they are to recommend delivery of Walmart goods to other drivers.

The document also promised “there are more changes on the horizon” pertaining to its relationship with Walmart, though it did not specify what those are. DoorDash declined to provide the survey results to Reuters or elaborate on future changes.

DoorDash said it charges different prices based on distance, time and which services its merchants need. Spokeswomen for Walmart and DoorDash declined to disclose financial terms of the companies’ agreement.

Walmart said it has taken several measures to speed online orders for pickup and delivery, including raising the number of personal shoppers in stores to more than 170,000 from over 63,000 in November 2019, a move that could help reduce how long drivers wait for parcels.

Walmart is also adding small robot-staffed warehouses to dozens of its stores to help fill orders faster, the company said in January.

Some Walmart workers also “regularly” drive for third-party delivery companies so they can report back to Walmart on their experience.

DoorDash driver Brian Cavanaugh, 48, said he is happy to take all orders, including Walmart’s, when he is delivering outside of Cleveland. After one recent Walmart order, a customer tipped him $40.

“If I see a Walmart order, I immediately within seconds am pushing that button to accept,” he said. “The Walmart experience for me has been nothing but positive.”

Reporting by Hilary Russ in New York and Richa Naidu in Chicago; additional reporting by Jeffrey Dastin in San Francisco Editing by Nick Zieminski

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