In an article today in Predators & Plutocrats magazine, journalist Hugh Janus takes us on a tour of the first Wubermart superstore, the new joint venture between Walmart and Uber. We also get the scoop on the future of retailing and employment in his in-depth interview of the mastermind behind the project.
An insider's look at the new Wubermart superstores by Hugh Janus
Ever since Walmart and Uber announced earlier this year that they were developing a new model for retailing, industry insiders and investors have been anticipating the results of their cooperative endeavor. The wait is over.
Hardly more than a stone's throw from the global giant's headquarters in Bentonville, the new Wubermart supercenter is located in Bugtussle, Arkansas, a charming rustic town that is proud of its Ozark heritage. Residents are thrilled that they can now buy Chinese-made American flags and imported "
Keep immigrants from stealing our jobs!" bumper stickers at rock-bottom discount prices. Equally exciting is the shopping experience in a new store that has just
one employee: that's right, only one salaried employee for the entire 200,000 square foot retail complex.
I.M. Roothliss, vice-president of retail development for Walmart, explained the company's motivation for changing the way it staffs its stores.
"Labor costs have long been a huge burden but it was the additional support required that made us take a long hard look at our ancillary costs for labor. We found that there was a stifling effect on profits when we factored in our costs for services like personnel and materials to enroll our associates in food stamps and Medicaid programs, for example."
Executives looked at the way Uber had managed to shed almost all of the labor costs in its business. By shifting costs from the company to the drivers, and classifying them as independent contractors, Uber freed itself from both expenses and regulations.
Roothliss continued,
"We brought in Uber as a partner to design and implement our new retail model. Their expertise at pushing costs onto the employees...erm, independent contractors...and the public was something we knew would change retail forever."
Manager's birds-eye view of the Wubermart
Using technological innovation, Wubermart is a lean and mean operation. No employees are needed for stocking shelves; instead, independent contractors use a smartphone app to bid on incoming pallets. At the supercenter's loading dock, I watched a crowd of stocker-contractors rapidly survey an arriving pallet of boxes of Cheetos and immediately the bids popped up on the overhead tote board. The winning contractor would stock the gondolas and move the remaining boxes into inventory for 7 cents per box.
Wubermart's mastermind noted that the system eliminates corporate liability and any responsibility for the contactors' benefits.
"Every time a contractor wins a bid and accepts the ultra-short contract offer, he has to click OK to accept the terms as well. Those release us from personal injury liability, claims for sick leave benefits, vacation benefits, and so on. It also automatically enrolls the contractor for an ultra-short insurance contract from our subsidiary, Wal-Indemnity, Inc., to cover injuries to himself, other persons or our property and the premium is deducted from his pay."
The V.P. proudly explained that independent contracting is not limited to the behind-the-scenes activities of Wubermart.
"We have outsourced checkout as well. Our shopping carts are equipped with mini-GPS devices which track a shopper's movement, starts, and stops throughout the store. As he or she approaches checkout, sensors beneath the floor weigh the cart and use an algorithm to estimate the total value of merchandise based on weight and the customer's activity.
Then the bidding begins. The tote board above the checkout lanes shows the estimated grand total for the next customer and waiting cashier-contractors use our app to flash the percentage fee they will charge. Our average cost is a mere 0.28% of the customer's total."
[The article continues below the independently employed orange curlicue]
Mr. Roothliss chuckled and confided that there were even more benefits for the corporate behemoth.
"Not only have we reduced labor costs by 62%, we're making money on the back end as well. The contractors pay a monthly fee for the smart app, data usage for our Wal-Tel cellular service, and most just rent the cell phones from us because they can't afford to buy them. Plus they buy their required uniforms right here at the supercenter.
The kicker is that after ten or twelve hours of waiting, bidding, and running to the registers they're too tired to go anywhere else, so they spend the majority of their pay here for groceries and other items. In the end, we get back about 57% of everything we pay out."
This money-recycling system hasn't even been ramped up fully yet. According to the executive,
"This supercenter is just our prototype. The supercenters we will build nationwide will incorporate a Wubervillage within each retail complex. Contractors can bid for the right to warehouse their families in cozy sleeping cubicles, dine in our contractor-run canteen and even enjoy an hour of fresh air, sunshine and grass in our enclosed courtyard for an additional fee.
With the public education funding we will receive, plus contractor-parents' tuition payments, our Wuberschool will turn huge profits from day one. Our Wubercare health clinic, staffed by unlicensed physician-contractors via remote satellite hookups in third world countries, will accept Medicaid and cash bids for services. The Wubervillage will meet every need of its inhabitants so efficiently that we expect generations of serfs....erm, contractor-residents...to be born, live and die without ever leaving the supercenter."
I asked Pranav Chakravarthi, the general manager of the superstore and its sole employee, if it is a challenge to supervise so many independent contractors. He assured me that "with all of the automated systems we have in place to monitor activities and performance, the store almost runs itself." That is fortunate given that Mr. Chakravarthi oversees the operation from the other side of the world at his parents' home in New Delhi.
Using a small quadcopter fitted with a hi-def camera and speakers, the 19 year old manager is able to maintain a top-down view of overall activity as well as navigate to potential hotspots and zoom in on the finest details. An avid video gamer, he deftly maneuvers his supervisory symbiont.
Pranav Chakravarthi, general manager
Automated software on his laptop reads the bar codes on contractors' name tags and flashes the relevant information on his screen. The contracted spot-laborers were taken aback at first, but now have become accustomed to the "voice of God" booming down from above in the lilting Indian accent of their manager.
I admit I was a bit disconcerted myself initially during our interview. It felt somewhat awkward carrying on a conversation with a hovering, and somewhat menacing-looking, machine. Mr. Chakravarthi assured me that his drone was armed with nothing more than a camera but jested that Walmart Armaments, Ltd., the parent company's munitions division, might alter that if labor conditions ever merit it.
So far, he's delighted with his job in America and has big hopes for the future. He bubbles over with enthusiasm as he explains,
"This is an incredible opportunity for me. With a high monthly salary of 6,000 rupees [about US $97], I will be able to afford my own apartment soon. If Walmart adopts this strategy in all of its 4000+ stores, I have hundreds of siblings, cousins, and neighbors eager to become American store managers. Go USA!"
Back with Mr. Roothliss, he had some final thoughts to share.
"I realize financiers and oligarchs may be skeptical about whether or not we can make this work. Look around us, right now, and you can see the contractors lined up, eager to underbid each other in order to win the fleeting single-use contracts.
This giant facility was built using this system. We sold every nail, every pound of cement mix, every hammer and every length of cable used in constructing the supercenter. We issued the specs, opened the bids and let the winning contractors do their job allotment of hammering 200 nails or painting 100 square feet of wall. You know what it ended up costing us, net total? 3700 bucks.
The 'gig economy' works and this building is proof. Pit the peasants against each other and plutocracy will always emerge victorious. The only thing they hate more than us is the idea that one of them might get more than he deserves."
Readers of
P&P magazine have been putting that principle to good use for decades. It's always been a winning formula and Wubermart looks to be a spectacular winner.
[Reprinted with permission of Hugh Janus]