WalMart has announced they are rolling out a new subscription service, WalMart+. Will this finally be a worthy competitor to the already widely adopted Amazon Prime service?
Lessgistics is a key player in the ecommerce universe and has been waiting for WalMart to make its move to gain market share away from the 800lb gorilla in the space, Amazon Prime. WalMart+ has finally been announced and Lessgistics is here to guide you through how these two competitors stack up against each other based on what is known today.
Amazon Prime – $12.99 per month or $119.00 annually
WalMart+ – Initial reports according to Recode have the subscription stating $98.00 annually
If you look at this based strictly on the sticker tag price of course WalMart+ is $21 cheaper annually. However, when putting the context of value-to-price Amazon wins hands down as it has a 15-year head start on WalMart. They have created an intense amount of additional value-adds over the years to make the $119 annual price tag palatable. The price has only increased twice in the history of Amazon Prime. When the service launched in 2005 it was initially $79/yr. That price was increased to $99/yr in 2014 and to $119/yr in 2018. There will now be more pressure on Amazon to hold on price increases until WalMart raises their price in the future. Today, based strictly on price WalMart is cheaper.
Amazon Prime – Prime members can select “Prime” eligible shipping on products where offered and enjoy 2 day (or less) lead times, same day shipping (zip code dependent) and in some cases 2-hour shipping based on zip code & product. The monthly or annual subscription is unlimited and this shipping service in particular has skyrocketed with the recent pandemic related safety precautions.
Amazon really pioneered expedited national shipping that is delivered on a regional and local level. They invented the often referred to shipping term ‘fast and free.’ They did this by continuing to build our their behemoth fulfillment center footprint in the United States and other developed countries. They mastered how to get the right inventory in the right geographical locations to make national expedited delivery a standard which many businesses try to emulate but just can’t due to their comparative size.
Walmart+ – Initial reports according to the same Recode article state same day delivery for groceries and other general merchandise from Walmart Supercenters.
Here is where WalMart has a clear advantage over Amazon. They have over 4,000 stores across the United States with over 3,200 of them being Supercenters (grocery + merchandise). Over the past few years WalMart has been turning these stores into mini shipping sites, as well. Thousands of Supercenters across the U.S. are now equipped to deliver packages. The biggest competitive advantage here is how hyper-local these deliveries can be. WalMart has coverage in suburban and urban areas, hitting a large swath of the U.S. demographics. They can use their own store employees to deliver these packages in a relatively small radius. All this said, we are yet to see WalMart execute this initiative on a large scale. Clearly this is what they are going after with WalMart+ over the coming years.
Winner: Amazon Prime near-term, WalMart+ long-term
Amazon Prime – Prime members receive access to unlimited streaming music (via their Alexa devices and other Amazon apps) along with access to movies and TV shows (both original and box office). Many Amazon Prime original series or movies have received both critical and audience acclaim making this a huge perk of the brand’s offering.
Walmart+ – No reports of any offers at this time.
Winner: Amazon Prime
Amazon Prime – Prime members enjoy discounts at Whole Foods and as well as same day options on select eligible products in select geographical markets.
Amazon purchased Whole Foods in 2017 for a cool $13.4 billion. Whole Foods has a fervent customer following but they do only have about 500 stores. Amazon has mostly been hands off with the Whole Foods acquisition. They did focus on lowering some prices across categories in the first couple of years, but lately you really don’t hear much about how Amazon has integrated the grocer into its massive universe. It still kind of feels like a stand-alone business.
Walmart+ – Reports state that subscribers will receive free same day shipping.
Again, the sheer volume of WalMart stores across the United States make this an advantage for WalMart. In fact, WalMart is the #1 grocer in the United States, with over double the volume of its next closest competitor, Kroger. WalMart has over a 10x lead on Amazon (Whole Foods) n the grocery market. This feels like an insurmountable lead, especially as WalMart continues to offer new grocery pick-up and delivery options which should only further increase their dominance.
Per Statista, Amazon Prime has 150 million subscribers in their heavily used subscription universe. This wide of an adoption rate will be difficult to topple as many consumers have the “set and forget” mentality for this type of service and will stay with Amazon Prime simply based on the convenience and perceived set-up hassle of another platform. WalMart+ will need to offer more than just a reduced price to draw customers away from Amazon Prime. They need to think outside the box about what consumers are looking for, both now and in the future. With the current pandemic and shifting normalization of individuals spending much more time at home there are opportunities to offer their subscribers even more conveniences that focus on the home, entertainment, safety and speed. There is also the current perception of Amazon related to their growing counterfeit product issues that, if marketed the correct way, Walmart+ could gain trust quickly in this arena. Whatever the angles will be the group here at Lessgistics will be curious to discover what WalMart dreams up with their new subscription service. Equally interesting will be Amazon’s response. Regardless which company ‘wins’ long-term the true winners will be you and I, the consumers!
Lessgistics’ mission is to be the leading provider of customized supply chain solutions that maximize clients’ profitability. Every aspect of our company is dominated by data analysis. Our team focuses on quickly identifying areas of opportunity within your data sets to optimize your Operation. Then, we provide each of our clients with easily digestible and insightful proposals and reporting to ensure cost optimizations are achieved. Reach out today for a free consultation!