Walmart Plus takes on Amazon Prime with cheaper $98 membership fee
At $119 a year, Prime is the more expensive option, but it includes lots more perks.
A truck hauls Walmart merchandise down the highway near Fredericksburg, Texas.
Walmart has seen its e-commerce business grow enormously during the coronavirus pandemic, as millions of people have avoided venturing into stores. The big box retailer is now doubling down on its ambitious e-retail goals to help it keep expanding online and to help shoppers get digital orders faster.
On Monday, Walmart said it's building out its e-commerce membership program to include more items and more perks, like shipping as fast as same day for orders of at least $35 and a cashierless checkout feature in the Walmart app. It's the company's latest bid to take on Amazon Prime , after it's introduced other membership programs over the years that haven't caught on with customers. The new program, previously called Delivery Unlimited and focused on groceries, will be renamed Walmart Plus and add many items you'd find in a Walmart store, including toys, electronics and household essentials like cleaners and toothpaste.
All Delivery Unlimited customers will be changed over to the new program, which will have the same pricing at $98 a year or $12.95 a month. Walmart Plus, which was expected to launch earlier this year, will be available across the US on Sept. 15.
"We've designed this program as the ultimate life hack," Janey Whiteside, Walmart's chief customer officer, said during a press call Monday.
This bolstered membership program should help Walmart continue its fast growth in e-commerce, where it's already become the second biggest online seller in the US but remains well behind Amazon . Last month, Walmart, the world's largest retailer, said its e-commerce sales nearly doubled in its latest quarter, as more customers used curbside pickup and other online services.
While these are obvious positives for the company as it's spent billions of dollars pushing into online retail, Walmart Plus should face tough comparisons with Amazon Prime, a 15-year-old program that has over 150 million users and a much longer list of benefits. Those perks include the Prime Video library, Amazon Fresh grocery deliveries and no delivery minimum for many low-priced items. Prime is a more expensive option, at $119 a year.
"We're not launching Walmart Plus with the intent to compete with anything else," Whiteside said when asked about Prime. "We're launching it to meet the needs of our customers."
Walmart does have the upper hand in grocery. It's the biggest grocer in the US, while Amazon is a much smaller food purveyor. Walmart has built on that strength with a successful curbside pickup program and online grocery deliveries. Amazon has worked to undercut Walmart's lead by buying Whole Foods in 2017, opening a handful of new convenience and grocery stores, and expanding its Amazon Fresh delivery service.
This is not the first push Walmart has made into a membership program, having run the now discontinued ShippingPass and Jetblack programs. Delivery Unlimited was also widely expanded last fall. Whiteside said Walmart has learned a lot from those past programs and used the best parts of them for Walmart Plus.
The new program's perks will include faster shipping, with deliveries for members of 160,000 items arriving as fast as the same day at no additional cost. Orders must be at least $35, the same minimum as with Delivery Unlimited. Nonmembers currently get free two-day deliveries for millions of items on orders of $35 or more. Free next-day delivery for nonmembers is also available but only in specific zip codes.
In-store shoppers will have access to a "Scan & Go" feature that lets them scan items with their phones and pay for them using Walmart Pay, allowing them to avoid the checkout line. Walmart was testing out a similar cashierless technology in a Sam's Club store since 2018. These kinds of contactless payments are especially useful during the pandemic to help customers avoid touching payment terminals and other shared surfaces.
Added to that, Walmart is offering a fuel discount of up to 5 cents a gallon at about 2,000 Walmart, Murphy USA and Murphy Express locations. Sam's Club stations will be added to that list soon.
"My sense is they are going to do a bit more to entice people into this, because as it stands it's not a bad program but it's not a great program," Neil Saunders, an analyst at research firm GlobalData, said Tuesday. "When you look at Amazon Prime, it's just light-years ahead."
He added that Walmart will face an uphill battle against "subscription fatigue," as shoppers have already budgeted for Prime, Costco, Spotify, Netflix and plenty of other services.
To that point, Whiteside said more benefits will be coming to Walmart Plus, though she avoided offering any specifics. She added that the program was designed specifically for the US market, and declined to say if there are any plans to expand it internationally.