It was first reported in February that Walmart would launch a new subscription service that will cost $98 a year, but amid the Covid-19 pandemic the launch never happened.
Recode now reports the new service will include perks like same-day delivery of groceries and general merchandise, discounts on fuel at Walmart gas stations, and early access to product deals.
"In the months following the rollout, I expect we’ll see new digital services added by Walmart,” notes Marcel Hollerbach, CMO at Productsup. “A subscription program provides the company with access to the resources and outlets needed to build additional offerings around their retail business, such as online gaming or video subscriptions. For Walmart+ to be successful, Walmart will need to offer services that are difficult for other players like Amazon to replicate, like discounts on gas. The retailer’s large network of physical stores that are local and close to consumers is one competitive edge that Walmart should find ways to capitalize on."
If the membership program launches this month it will bring Amazon more direct competition from Walmart at a time when the two retailers have been battling it out to capture shopper dollars during the coronavirus pandemic. The Harris Poll Essential 100, a ranking of corporate response to the pandemic, ranked Walmart at No. 5 and Amazon one spot behind at No. 6 in its top 10 most essential companies during COVID-19. As the online demand for groceries heats up, both retailers need to meet consumer demand for speedy delivery.
A recent report on the State of Commerce Experience, conducted by Forrester and commissioned by Bloomreach, found that the COVID-19 pandemic has driven half of shoppers to buy products they’ve never bought online before, and 70% are buying more than usual with a focus on necessities like groceries.
“Customers are looking to leverage online channels for grocery shopping, as they see online shopping as safer, but there have been some major experience challenges customers have run into with delivery issues and pickup slot availability,” says Raj De Datta, CEO and Co-Founder, Bloomreach. “The launch of the Walmart+ membership could help the company address some of these commerce experience challenges while also doubling down on their investments in online channels that will help them compete in the growing online grocery market. Amazon created a set of table-stakes with their marketplace-based online experiences. Walmart seems to have understood the value customers get from Amazon Prime and is emulating its practices with its new membership program. Walmart has an opportunity to shape the stakes in online grocery by focusing on convenient customer experiences that leverage digital channels as a central component of the experience. With similar programs that differ on a few key benefits, it will be interesting to see which program sets the bar for memberships moving forward.”
While the two services may be similar, there are a number of advantages for both sellers and customers when two similar services are competing, says Kunal Chopra, CEO, etailz.
“By being able to weigh options and not fall into vendor lock-in, Amazon risks losing some sellers and customers to Walmart’s rivaling membership,” notes Chopra. “For third-party sellers specifically, there is increased competition from Amazon’s private labels on its site. It’ll be interesting to see if Walmart follows a similar model or if the battle for the buy box will be exclusive to the Amazon platform. Walmart has been closing in on Amazon’s e-commerce lead in recent years and the rollout of Walmart+ puts the two within arms reach.”