Amazon Prime will face serious competition as Walmart – the largest retailer in the U.S. by sales revenue – unveils its own membership program later this month called Walmart+. The new membership program will cost $98 a year ($8 a month) and will include perks like same-day grocery and general merchandise delivery, discounts on fuel at Walmart gas stations, early access to product deals, and discounts on prescriptions.
Walmart currently has a membership program called ‘Delivery Unlimited’ where consumers can pay $13 monthly or a lower fee of $98 annually for unlimited grocery delivery. Walmart+ will replace it, adding the following benefits:
- Prescription discounts
- Fuel savings at gas stations
- Scan & go system that would allow shoppers to check out in Walmart stores without waiting in line
- Reserved delivery slots and open-slot notifications
- Access to Walmart’s new Express two-hour delivery offering (not unlimited usage).
Walmart+ pilot program is expected to go live sometime this month.
The retail giant originally planned to unveil the program in late March or April, just before the Covid-19 outbreak began sweeping across the US in the beginning of March. While many businesses folded completely, Walmart’s earnings soared in the Q1 2020. Sales took off even more in mid-April when many Americans began to receive their $1,200 stimulus checks.
“We experienced unprecedented demand in categories like paper goods, surface cleaners, and grocery staples. For many of these items, we were selling in two or three hours what we normally sell in two or three days. As the quarter progressed, we saw a second phase related to entertaining and educating at home. Parents became teachers. Adult bicycles started selling out as parents started to join the kids. An overlapping trend then started emerging related to DIY and home-related activities,” said Walmart Chief Executive Doug McMillon.
Amazon VS Walmart
Walmart sales reached a record high earlier this year. However, its US e-commerce presence is still only around 1/8 the size of Amazon’s. Arguably, Amazon Prime is one of the main reasons that today Amazon is valued at $1.5 trillion, while Walmart is only worth $337 billion.
Launched 15 years ago, Amazon Prime – $119 annual fee – now has more than 150 million members globally and offers express delivery of groceries and other items, access to a large catalog of TV shows and movies, as well as exclusive discounts at Whole Foods stores. Understandably, Amazon Prime members shop with higher frequency and spend more on Amazon than non-Prime members.
According to Recode, more than half of Walmart’s top-spending families have Amazon Prime memberships. However, Walmart’s overall grocery business is larger than Amazon’s and during an economic recession, price point becomes the main deciding factor for the majority of consumers. As a rule of thumb, Walmart offers lower price points across all categories.
When Walmart’s program launches, a Walmart+-branded credit card is also expected to be introduced. Currently, Walmart has Capital One co-branded credit card.
There have been rumors that Walmart has plans to add video entertainment components to the new program. Starting this week, the multinational retailer is unveiling an online FREE family entertainment program called CAMP – a virtual camp where families can craft, learn magic, and do tons of other fun activities together, hosted by Neil Patrick Harris, Drew Barrymore, and LeBron James.
Another significant difference between the two retailers is customer service. Generally, consumers have a more positive impression of Amazon customer services than that of Walmart. However, according to a recent report, the share of people who said they have a positive impression of Amazon “dropped from 74 % in January before the pandemic hit the US to 58 % in May”.
In other words, Walmart might have a real chance here to outbid Amazon in regards to customer service in addition to lower price point.