Walmart plans to launch a new loyalty program that will offer online customers unlimited free shipping for $50 per year. The program is half the cost of Amazon Prime, but does not include some of Prime’s popular perks such as streaming movies and TV shows, photo storage, and e-books. Walmart’s new service is part of a larger competition between retailers and e-commerce marketplaces for loyal customers. Walmart did not specify which markets will be part of the initial launch.
In fact, Walmart was pretty sparse on the details of the launch. The service will be available by invitation only in select markets during initial testing. There’s no word about how long the test will last or how many people will be involved. However, the company did guarantee three-day shipping for over one million products.
Walmart’s new service still has a lot of catching up to do to measure up to Amazon Prime. Amazon’s service offers two-day shipping for over 20 million products. In the next few years, the company plans to expand its same-day delivery service, and even two-hour delivery, to every major metro area, according to Bloomberg. Also, Amazon has 68 fulfillment centers in North America, compared to Walmart’s five.
Walmart, along with Home Depot and Target, are building new fulfillment centers this year to keep up with the rising demand for online orders. These fulfillment centers are different from traditional warehouses because humans and sometimes machines need to be able to get individual items, instead of bulky stacks of these items.
Target expects to spend $1 billion improving the infrastructure that helps items get from a fulfillment center to a doorstep or a store for pick-up. The retailer is also expanding its network of physical stores that can fulfill online orders, reports The Wall Street Journal. Walmart is experimenting with new pick-up locations.
The new fulfillment centers, pickup locations, and shipping services are all part of the stiff competition between retailers and e-commerce markets. The Chinese e-commerce site Alibaba is expected to start its own service similar to Amazon Prime. A startup called Jet is also planning to launch a buy-in membership for online access to discounted goods.