Walmart+ Is Coming to Compete With Amazon Prime

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The news cycle had barely concluded on the launch of a Walmart fulfillment service to attract third-party sellers competitive with Fulfillment by Amazon, when Walmart said it was launching a membership program a la Amazon Prime.

Recode broke the news, reporting that Walmart will begin testing the new membership program as early as March, initially as a rebranding of the $98 a year same-day grocery delivery service Delivery Unlimited.

A possible feature of the new membership program would allow customers to order by text message, Recode said, describing a long-term plan to add features not available to Amazon Prime members such as discounts on prescription drugs at Walmart pharmacies and gas at Walmart gas stations, as well as scan-and-go checkout service in Walmart stores.

Walmart cited strong ecommerce and e-grocery sales as high points for its Q4 2019 earnings, attributing 35% ecommerce sales growth in Q4 largely to e-grocery pickup and delivery.

The ecommerce sales gap between Amazon and Walmart is massive, however, A new report from analyst firm eMarketer said Amazon leads U.S. ecommerce sales with 38.7% of the market, dwarfing Walmart market share of 5.3%, which places it second.

MarketWatch checked in with analysts on the Walmart+ plans, who raised doubts about the potential for success. Stephen Beck, managing director at consulting firm cg42, told MarketWatch, “Prime has been around for a long time and has developed way beyond prepaid shipping.”

Amazon Prime has 150 million members. It costs $119 a year and offers unlimited 2-day shipping on more than 100 million items, free same-day delivery on more than 3 million items for qualifying orders over $35, and free two-hour deliver on groceries. Prime members also get unlimited streaming of movies, TV shows, and Amazon original films and shows, access to more than 2 million songs on Prime Music, and exclusive deals and offers.

MCM Musings: we’d have to concur with leery analysts that Amazon Prime has such a massive share, head start and moat that Walmart+ will have a tough time making headway. It may peel off some Amazon sellers but we suspect they would continue to sell on both marketplaces and A/B test the results. Walmart should continue to differentiate itself in ecommerce by leveraging its massive store network for local fulfillment, especially store pickup, as well as its robotic and automation initiatives.

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