Report: Walmart Launches Walmart+ To Rival Amazon Prime, But Will The Investments Pay Off?

Walmart has revealed its plans to launch a new fee-based membership program designed to compete directly with Amazon Prime, the retail giant confirmed in a Recode report. The program, called Walmart+, does not yet have a set fee (and the retailer could test multiple price points), but it will be tested among consumers as soon as March.

The program would essentially be a rebrand of Walmart’s existing Delivery Unlimited grocery delivery service, which costs $98 per year (or $12.95 per month). The service allows members to receive an unlimited number of same-day deliveries without paying a fee. Shoppers can order fresh produce, meat and bakery items as well as pantry goods and certain general merchandise items, either online or through the existing Walmart Grocery app.

Walmart currently offers Delivery Unlimited from approximately 1,600 stores. By leveraging its massive store base, Walmart is seeking to bring a value proposition to customers that Amazon can’t. Amazon Prime costs members $119 per year for perks including unlimited one-day shipping on more than 10 million items and access to Amazon’s catalog of TV shows and movies.

“[Walmart is] leveraging their 1,600 locations in a unique way that Amazon will find hard to match with 91% of the U.S. population living within 10 miles of a Walmart store,” said Ken Morris, Analyst at Boston Main Streets Foundation in a RetailWire discussion. “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.”


But even with its physical advantages and willingness to invest in the program, Walmart will find it extremely tough to catch up with Amazon — especially since Prime already has more than 150 million paying members globally. Amazon wasn’t afraid to spend $800 million to make one-day shipping the Prime standard, even if it meant short-term profit hits in ensuing quarters. Additionally, the e-Commerce giant doesn’t have the internal divide that has reportedly plagued Walmart, with the store and online teams colliding over $1 billion in e-Commerce losses and differences over inconsistent pricing and the use of stores for home delivery.

“In order to catch up to Amazon Prime, Walmart must leap ahead of it,” said Steve Montgomery, President at b2b Solutions LLC in the RetailWire discussion. “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.”

The Recode report noted that Walmart’s long-term vision for Walmart+ is to add more perks, which could include discounts on prescription drugs at Walmart pharmacies and fuel at Walmart gas stations. Montgomery noted that the fuel discount is “something Walmart’s infrastructure can offer that Amazon can’t.”

Members could potentially gain access to a Scan & Go service that would allow shoppers to check out in Walmart stores without waiting in line — a feature Walmart briefly tested in 100 stores but discontinued nearly two years ago, the report said.

As part of the program, Walmart is even considering an option where customers can use text messages to place orders, the report said. This feature would be similar to the recently discontinued Jet black personal shopping service, which let NYC-based shoppers text orders for on-demand products ranging from cosmetics to party décor.

Walmart is considering the additional perks as it seeks to close the massive market share gap it has with Amazon. Currently, Amazon’s total (38.7%) is greater than Walmart (5.3%) and the next eight competitors (16.4%) combined, according to eMarketer.

Walmart+ isn’t the only recent initiative that appears to be directed at Amazon. 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.

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