Walmart Subscription Service Aims to Take on Amazon Prime

Later this month Walmart plans to unveil Walmart+, a subscription service intended to compete with Amazon Prime. Walmart+ will cost $98 per year and, according to sources, will offer same-day delivery of groceries and “general merchandise” as well as early access to product deals and discounts at Walmart gas stations. The company originally planned to unveil Walmart+ in late March or April but pushed the date to July due to the COVID-19 pandemic. It’s still not clear if Walmart will introduce the service regionally or nationally.

Recode reports that Walmart chief customer officer Janey Whiteside is very involved with Walmart+ as is company chief executive Doug McMillon. Amazon, valued at $1.5 trillion, will be stiff competition for Walmart, which is worth $337 billion and whose e-commerce share is “still only around an eighth the size of Amazon’s.”

Further, half of Walmart’s “top-spending families now have Amazon Prime memberships. Other Walmart+ perks include “reserved delivery slots and open-slot notifications, as well as some access to Walmart’s new Express two-hour delivery offering, though not unlimited usage.”

Walmart is expected to debut a Walmart+ branded credit card at some point as well as “video entertainment components … though the details of this remain unclear.” The company unveiled Camp by Walmart, a free online family entertainment program in partnership with online video technology firm eko and retail startup CAMP. Walmart “has also considered partnering with big media companies on video content perks.”

The Los Angeles Times reports that Walmart+ is “rooted in three experiments the world’s biggest retailer has conducted in recent years to gauge the willingness of its shoppers to deepen their allegiance.”

First, its Scan & Go cashierless stores debuted in 2012, closed in 2018, and now may be revived as an exclusive Walmart+ perk. Computer vision and machine learning have reduced scanning time from nine seconds to three. In China, Walmart rolled out its second experiment, Mini Program, an external app that sat atop messaging system WeChat. “The program, which also facilitated same-day deliveries, was a huge hit, attracting more than 10 million monthly active users in less than a year,” says LAT.

Last year, Walmart introduced Delivery Unlimited, a program that cost $98 per year or $12.95 monthly for home delivery service. The program expanded to 1,400 stores last year.

With all three programs, Walmart gathered data about its customers, which it can use “to tailor its prices and product assortment, while also packaging and selling it to big consumer product brands for targeted digital ads.” Walmart is also “leveraging the long-standing relationships it has with major advertisers such as Procter & Gamble and Coca-Cola.”

A Credit Suisse/Numerator survey estimated that 5 million people could join Walmart+ when it launches, and that the “the potential audience could be as large as 20 million.” Credit Suisse analyst Seth Sigman said that, “this seems like an opportune time to roll out this offering.” “We see it as a way to retain incremental customers, create a higher level of stickiness, as well as attract new customers to its wider offering,” he added. “Walmart+ could be a key driver to pull it all together.”

Related:
Walmart’s New Subscription Service Has a Key Advantage Over Amazon Prime, The Motley Fool, 7/11/20