Walmart moves on Amazon Prime with subscription business

Walmart is offering a $98 annual subscription service to boost its online retail offering.
8 July 2020

Walmart unveils its subscription-based program. Source: Shutterstock

  • Walmart reported a jump of 74% in e-commerce sales in the first quarter
  • The retail giant is launching a subscription service that will contend with Amazon Prime

US retail giant has long been laying the pressure on e-commerce kingpin Amazon. Both firms are polarized in terms of background – Amazon: digital, Walmart: physical – but both now share a common goal in omnichannel retail supremacy.

The two retailers have very different strategies to that end – Walmart, for one, is leveraging its physical supercenter footprint as an equivalent to Amazon’s giant fulfilment centers – but there’s plenty of overlap and turf-encroachment going on too; both are hell-bent on self-driving deliveries, both have built an online third-party seller marketplace; and both now have their own paid subscription service.

According to Recode, Walmart’s paid membership program called Walmart Plus will cost US$98 a year and include offerings such as same-day groceries delivery, discounts on prescription drugs and fuel, and access to early product deals. 

Initially penned to launch in April, but delayed due to the pandemic, the price of a Walmart+ loyalty program would undercut a standard annual Amazon Prime subscription by US$21. To date, Amazon Prime costs US$119 annually. It marks a significant leap forward in the retailer’s bid to topple Amazon’s 15-year e-commerce leadership. 

Chief customer officer Janey Whiteside is spearheading the program’s development and rollout, which will expand on an existing grocery-delivery subscription released last year. While groceries remain one of Walmart’s core strengths, the launch of the subscription program may encourage customers to add other non-food items such as household supplies, apparel, and home decors into their cart. 

Revenues generated from the monthly subscription will see the supermarket giant attracting and expanding its customer base both online and offline, but will also provide new insights on consumer behavior and buying patterns on different channels to help the firm plan new services and features. 

This isn’t the first attempt by Walmart to offer a Prime alternative, however, having tested a program called ShippingPass, but the project was discontinued in 2017 upon the arrival of Marc Lore, who now runs Walmart’s U.S. e-commerce business. Now, in light of the spike in e-commerce demand amid the pandemic and presumably having learned a few lessons the first time around, the retailer is ready to try again. 

Walmart experienced a soar in online grocery sales amid the pandemic, and in May, the company reported a staggering 74% increase in e-commerce sales for the first quarter of 2020.