Will a new subscription program be Walmart’s winning answer to Amazon Prime?
Walmart will begin testing a new annual subscription plan as early as next month with features that will eventually go beyond those offered by rival Amazon.com’s Prime program.
A Walmart spokesperson confirmed to RetailWire that the retailer has created a new membership program operating under the name of Walmart+, but declined to offer any further details at this time.
Recode, which originally broke the news, reports that the subscription plan is a rebrand of Walmart’s Delivery Unlimited annual grocery delivery plan. The current plan, priced at a yearly fee of $98 or $12.95 a month, allows members access to an unlimited number of same-day deliveries from around 1,600 stores around the country. Delivery Unlimited was rolled out in September after Walmart successfully tested the service using third-party drivers in the Houston, Miami, Salt Lake City and Tampa markets.
The new program, according to Recode’s reporting, may allow members to place orders via text, similar to Walmart’s recently discontinued Jetblack personal shopping service.
Down the road, Walmart may look at adding other perks, such as discounts on prescription medicines and/or fuel at the chain’s gas stations. Also being considered is a service that would allow members to scan items as they shop in stores and then check out without having to wait in line.
Walmart is considering the additional perks as it seeks a means to gain online market share. Currently, Amazon’s total (38.7 percent) is greater than Walmart (5.3 percent) and the next eight competitors (16.4 percent) combined, according to eMarketer.
Earlier this week, Walmart announced the launch of Walmart Fulfillment Services, a program that stores, picks, packs, ships and handles returns of items ordered from third parties on the retailer’s online marketplace. The move, seen as an answer to the Fulfillment by Amazon program, is an attempt by Walmart to expand its roster of strong marketplace sellers. More than half of the revenues posted on Amazon’s site come from third parties.
- Walmart is quietly working on an Amazon Prime competitor called Walmart+ – Recode
- In power move, Walmart expands Delivery Unlimited – RetailWire
- How will Jetblack lessons inform Walmart’s conversational commerce efforts? – RetailWire
- Is Amazon’s speed killing the competition? – RetailWire
- Will fulfilling third-party vendor orders give Walmart an edge over Amazon? – RetailWire
- Target Cracks Top 10 US Ecommerce Ranking – eMarketer
DISCUSSION QUESTIONS: Is playing a one-upmanship game with Amazon Prime perks a smart strategic move for Walmart? What perks, if any, should Walmart+ offer to chip away at the hold that Amazon Prime currently has on the market?
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19 Comments on "Will a new subscription program be Walmart’s winning answer to Amazon Prime?"
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Founder, CEO & Author, HeadCount Corporation
Walmart is simply moving its offerings forward. Programs and offerings from Amazon, Walmart and other competitors will continue to evolve and so this latest move by Walmart is simply evolution. Walmart’s core perks program is already fairly robust, and so any additional tweaks and adjustments will likely be incremental.
Professor of Marketing, The Wharton School of the Univ. of Pennsylvania
I don’t mean any disrespect to Walmart, but Amazon Prime was (and still is) lightning in a bottle. Walmart+ might be fine, but it can never match the game-changing nature of Prime. So sure, Walmart needs to do it to try to keep pace, but expectations about it should be suitably modest.
Chief Amazement Officer, Shepard Presentations, LLC
Once you start collecting money on a regular basis (with a subscription/membership model), you can “own” that customer’s business. The customer wants to take advantage of the subscription. The company loves the steady recurring revenue. Subscription typically means something happens on a regular basis. It’s more than just free delivery. Amazon provides much more than free delivery that makes people want to keep subscribing – and paying a higher fee; movies/TV shows, music, etc. Customers love consumable products that they run out of on a regular basis that are delivered in a “don’t have to think about it, it just happens every month like clockwork” experience. Why? It’s just so easy.
I think, as others have already mentioned, this is a move to keep up with the Joneses (the Joneses in this case being Amazon). This may play well at the holidays, but I don’t see myself ordering from Walmart more because of this program compared to the amount of merchandise I order from Amazon.
President, b2b Solutions, LLC
In order to catch up to Amazon Prime Walmart must leap ahead of it. Matching Prime’s offer will not move the needle for Walmart in this two-party race. It needs to offer something more or at least something that is perceived as having additional benefits to break consumers’ habit of automatically thinking of Prime as the offer to join.
Based on what we have seen with loyalty programs in the c-store industry nothing is more popular than discounts on fuel. That is something Walmart’s infrastructure can offer that Amazon can’t.
Founding Partner, Merchandising Metrics
Sounds to me like Walmart+ has the opportunity to be even better than Amazon Prime in some respects. Walmart may not have been a “fast second,” but it looks like they are being a “smart second.” They are learning from the acknowledged pioneer and leader and building their own competitive model. They can leverage all the advantages that come from physical stores. Text on the run and BOPIS. Tie-ins with prescription meds and gasoline — it all sounds like a powerful combination of convenience and value for a busy household on the move. So they are not going to unseat Prime. I don’t think that’s even the point any more. Walmart has to compete and be profitable and this all sounds like a thoughtful approach on several levels.
Founder & CEO, New Retail Ethos & New Retail Ethos Publications
I completely agree with you, Jeff. Walmart has a gigantic advantage over Amazon with their store footprint, geographical proximity to most US consumers, and their extensive resources.
Managing Partner Cambridge Retail Advisors
I like this move by Walmart. They are leveraging their 4,600+ locations in a unique way that Amazon will find hard to match with 91 percent of the U.S. population living within 10 miles of a Walmart store. The potential here is staggering. If Walmart can leverage these locations and convert them to combo retail/mini distribution centers and add the subscription fee the ROI is within reach. If you don’t innovate you die, I applaud the initiative.
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
This is a smart move by Walmart, but unless you are currently a loyal Walmart shopper, the only potential compelling benefit is the free same-day delivery – especially on groceries. The challenge is that more than 100 million consumers are already hooked on Amazon and persuading them to switch or add a second online membership program is an uphill battle. Personally, I won’t switch or join Walmart+.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
While the recent moves will help, Amazon still enjoys first-mover advantage over Walmart and others. Despite the apparent advantage of delivery from 1,600 Walmart store locations, Amazon Prime is still the preferred market leader by a long shot.
Walmart still needs to crack the code of the real shopping differential advantage its bricks-and-mortar locations play in its omnichannel presence.
Retail Transformation Thought Leader, Advisor, & Strategist
This is a smart move by Walmart, but still not enough to entice any current Prime members to switch or add another subscription program. Amazon has successfully trained their customers to use them as the “go-to” source for everything they need. To change this behavior, Walmart must not just equal or surpass what Amazon offers – they must disrupt it as massively as Amazon disrupted them. Free same-day delivery is the crown jewel here so far. Adding discounts on gas and prescriptions? Yes, an improvement. But these are not yet disruptive. I do like the inclusion of order by text – perhaps leveraging valuable lessons from the Jetblack experience. That begins to disrupt the way in which customers use the service – make it so compelling it becomes the “go-to” service. Walmart needs to find more ways to leverage the one asset they have Amazon can’t match – their stores.
Co-Founder and CMO, Seeonic, Inc.
Walmart may be playing catchup, but they have over 4,000 stores and will leverage those stores in any program they create. Already, the Delivery Unlimited program distinguishes Walmart from Amazon in the grocery delivery category. If Walmart adds other categories like gasoline and prescriptions, they will one-up Amazon in a big way. Another perk that Walmart might add is prepared food delivery.
VP, Digital Technology (Foot Locker)
What the consumer cares about at the end of the day is speed, and Walmart’s store footprint gives them the edge over Amazon. The issue for Walmart is that they need more than speed to one-up. Right now, they’ve only “one-evened” and only in one area.
Retail Strategy - UST Global
Amazon or not — this is what shoppers want, and Walmart is pursuing shopper convenience as much as they may be pursuing Prime. I think this is an interesting opportunity to see if Walmart is also enlarging its customer base, with an online shopper who may not be an existing in-store shopper. Certainly with a store distribution network Walmart can likely hit this capability better than Amazon.
Director, Solutions Marketing with Alteryx
Vice President, Research at IDC
The average consumer buys from 4.4 different grocery providers in the same month. They sure as heck aren’t buying everything they own from an online vendor or from Walmart. So for all intents and purposes, this mechanism for Walmart makes sense, offering another way to engage and pay for retail services. This is not meant to be game changing, but it is meant to bite into the retail market some more.
With the exception of luxury or specialty goods, wallet share continues to be the place of contention. More importantly, Walmart holds a strong lead with about 9% of all consumer retail spending. Amazon Prime was an amazing chance phenomenon that hasn’t yet broken the 6% barrier for total retail spending, especially in the food and beverage sector and healthcare products. Good move for Walmart allowing more customer engagement, but not revolutionary.
VP of Advertising | Buy Box Experts
Amazon has raised the bar in several aspects with its Prime program, offering one day shipping, media and more. To continue to compete, Walmart and others have no choice but to step up their game. Done right, Walmart could outdo Amazon by leveraging its brick and mortar presence, for example offering same day delivery in more markets than Amazon is able to right now.
Founder, President, Bakertown Consulting
I believe the gas discounts are a game changer — especially for those in the “fly-over” states. In rural America, where Walmart is king, I can actually see people switching from Prime over to this option. I am from the rural Midwest and gas discounts are a big deal. Smart move by Walmart again.
Founder & CEO, New Retail Ethos & New Retail Ethos Publications
Looking forward to seeing Walmart expand their Walmart+ subscription program. Absolutely love to see legacy retailers embracing innovation.
The future of the the retail sector is evolving and changing very rapidly.
Walmart, Target, Home Depot, Lowe’s, Costco, Kroger, and Best Buy are making a strong case through their massive store footprint that retailers can effectively compete with Amazon.
Many of the retail C-suite management teams are bringing in diverse talent to augment and enhance their ability to compete with Amazon.
These big box retailers already have a massive headstart with their existing brick and mortar presence.
They are finally realizing that they have a gigantic advantage over Amazon.
By leveraging their store locations as mini-fulfillment centers, they are effectively tipping the scales in their favor.
I portend that other big box retailers will embrace the subscription service in the near future.
I am optimistic about witnessingmore retailers maximizing their resources to capture market share from Amazon.