Walmart delivery

Report: Walmart is Developing Amazon Prime Competitor

This week, Walmart officially launched Walmart Fulfillment Services (WFS) for marketplace sellers to entice brands and entrepreneurs to use its fledgling marketplace.

While Walmart has stocked up its online inventory with a greater variety of every-day big brand products, it has not seen the same enthusiasm for its marketplace, where smaller brands and entrepreneurs could offer more unique and specialty items.

For most smaller brands and business sellers, it is easier to send items to Amazon and have the company fulfill the orders. It is one of the pain points eBay sellers face today trying to compete, and Shopify is in the process of solving for its merchants.

Walmart’s biggest advantage in building a competitive fulfillment network is that it already operates a modern logistics operation that supports its stores and online commerce. WFS builds on top of the existing delivery infrastructure and partnerships.

While online shopping is a rapidly growing business for Walmart, it needs marketplace sellers to fill product voids to make it more attractive to shoppers who are used to finding almost everything on Amazon.

Amazon’s vast product mix has already changed consumer behavior as more consumers start on Amazon for product searches. This is another hurdle Walmart now has to solve.

Marketplace sellers know Amazon has the eyeballs to make their products successful because consumers are shopping on Amazon to buy items beyond everyday needs.

Amazon Prime has been a huge boon for Amazon to keep consumers tied to its platform, and it helps small brands compete.

With WFS, Walmart is addressing one area that can help the company gain more marketplace sellers and specialty products, but now it needs to find a way to get more eyeballs on its website and “marry” consumers to its brand.

Enter Walmart+

Recode is reporting Walmart is now planning to launch a public test of a membership program called Walmart+ next month. The company confirmed the Walmart+ membership program was in development, but provided no further details to Recode.

The new membership program appears to be an expansion of its Delivery Unlimited service, the company’s $98 per year grocery delivery program that offers free same-day delivery of groceries at over 1,600 participating stores.

According to the article, and the always famous “unnamed source(s),” Walmart plans to add additional perks to Delivery Unlimited and rebrand it as Walmart+ that may include:

  • Online orders by text messaging
  • Savings at Walmart gas stations
  • Prescription drug discounts
  • Scan & Go services that allow consumers to skip the cash registers

While none of these perks are helping online commerce (directly), they offer a different value-added to the Walmart+ membership program versus Amazon Prime.

For many consumers, the value of Amazon Prime is not just fast shipping, but other perks such as the video library, music library, unlimited photo storage, free select online books, etc.

Walmart Second Bite at the Apple

Previously, Walmart tried a $49 per year membership program called ShippingPass that offered free 2-day shipping. But the company quickly abandoned the project as consumers were not willing to pay for a “shipping-only” membership.

The Recode report suggests the new perks appear to support in-store shopping and online grocery delivery mostly, but it also said the company might consider other perks.

Furthermore, Recode claims there is an internal debate if beefing up the grocery delivery membership under a new name is enough to entice more consumers to join up.

It would seem that offering a membership program that is distinctively different from Amazon Prime by leveraging Walmart’s greatest assets could succeed.

Perks build on the company’s store network, and its generally more affordable grocery business may entice more consumers to its membership program. But it seems to really scale Walmart+, it needs to compete better with Amazon’s online offering.

In the short-term, Walmart+ may only help Walmart’s own online grocery business and in-store sales.

However, in the long-term, it could morph into a real competitor to Amazon Prime if it includes more features that attract consumers to use its online shopping platform.

Do you think Walmart+ could evolve into a real competitor to Amazon Prime?

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