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Walmart Has a New Plan to Take Down Amazon (More Free Stuff)

by WOOWinvest
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Walmart Has a New Plan to Take Down Amazon (More Free Stuff)

Amazon (AMZN) built its retail business on the back of Amazon Prime, a service that has grown fast but launched as something very specific.

When Amazon Prime started up in 2005, it offered unlimited two-day shipping in exchange for a membership fee. There were some caveats and exceptions, but that was the core offer.

Now, Amazon Prime has grown into a service that mostly offers one-day shipping, and while the cost has gone up ($14.99 a month or $139 a year) what’s offered has dramatically increased as well.

Members now get some same-day shipping and many orders are delivered the next day. Amazon also has increased the available items to the hundreds of millions while also adding the Prime Video streaming service as well as a number of other perks.

Walmart (WMT) , Amazon’s chief rival for shoppers, since 2011 has tried to rival Prime with a variety of different offers. Those offerings have helped the chain to a point, but they’re basically just “Prime Light.”

In 2020, however, the brick-and-mortar chain launched Walmart+, a sort of Prime rival, built around leveraging Walmart’s massive store footprint.

“Walmart+ uses the company’s unique assets to make life easier for busy families,” the chain said at launch.

“Along with the power of its online presence, Walmart+ has the reach of more than 4,700 stores, including 2,700 stores that offer delivery as fast as same day. Members will receive unlimited free delivery from stores, fuel discounts, and access to tools that make shopping faster for families.”

Membership costs $12.95 a month or $98 a year. And now, the chain has made a huge improvement to Walmart+.

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Walmart Has One Advantage Over Amazon

Walmart+ isn’t Amazon Prime, which offers over 100 million items. Instead, it’s a more focused service built around what the chain stocks in its more than 4,700 stores across the US

When the service launched, Walmart touted “in-store prices as fast as same-day on more than 160,000 items from tech and toys to household essentials and groceries,” according to a news release.

It was meant to build on the one advantage that Walmart has over Amazon — that 90% of Americans live within 10 miles of a Walmart. That enables the chain to get items from its stores to its customers faster than Amazon can with its network of distribution centers.

Admittedly, that’s an edge Amazon has been looking to take away as it builds out its fulfillment network and dabbles in lower-cost grocery stores along with its high-end Whole Foods locations. Now, Walmart is using a classic grocery store technique to entice people to join Walmart+.

Walmart Improves Its Membership Service

Grocery stores (and other retailers) have long used deals and coupons to lure customers in and make them more loyal. Apps and loyalty programs are sort of the modern take on that and Walmart has added a new rewards system for Walmart+ members.

“Walmart Rewards is a new and easy way for Walmart+ members to earn additional savings towards future Walmart purchases,” the company said.

“Let’s say after a few shopping trips or online orders, a member has accumulated $10 in Walmart Rewards. When they apply those savings at checkout, what was previously a $25 basket now only costs $15.”

That’s pretty similar to the Kohl’s model (KSS) uses with its Kohl’s Cash. Amazon lacks a similar program (although Prime members do get discounts when shopping at Whole Foods). It’s a system where the company uses your current visit to give you an incentive to visit again.

“As members search for products on Walmart.com or the Walmart app, they’ll see an option to add rewards, starting with hundreds of bestselling items, from groceries to household goods to pet care and beyond,” the company said.

“Members can bank their digital rewards in the Walmart wallet in the app and online and use them to save on future purchases in stores and online.”

At first, the program will be purchase-based, but Walmart promised that there will be other ways to earn rewards.

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