Will ending minimum purchases turn Walmart+ into a serious Amazon Prime rival?

Discussion
Source: Walmart
Dec 02, 2020
George Anderson

Walmart announced that members of its Walmart+ subscription plan will no longer be required to make a $35 minimum purchase to qualify for free next-day and two-day shipping on online orders.

“Customers have been clear — they want this benefit,” Walmart’s chief customer officer Janey Whiteside said in a statement. “Being able to toss an item into your cart, regardless the total, and check out right away lets them knock little things off their to do list in no time.”

Subscribers, who pay $98 a year to join the program, will still have to meet a $35 minimum to qualify for free, unlimited same-day deliveries of groceries and general merchandise from the chain’s supercenters.

“No other membership allows customers across the country to get everything from gingerbread cookies and eggnog to holiday decorations and toys delivered for free as soon as the same day,” said Ms. Whiteside. “Walmart+ is designed to make life easier — giving customers an option to not have to sacrifice on cost or convenience.”

Walmart also announced that it is expanding its fuel discount program for Walmart+ members. The retailer added gas stations at its Sam’s Clubs across the country in addition to more than 2,000 of its namesake, Murphy USA and Murphy Express locations.

Members will also be able to continue using the retailer’s Scan and Go technology in stores to checkout using their smartphones.

The additional perks to Walmart+ are part of the retailer’s plans to continue offering greater value to members. Many see the program as Walmart’s answer to Amazon Prime. Research has shown that more than half of the retailer’s top customers are members of the rival retailer’s program. Walmart has ramped up hiring, doubling the number of associates in the U.S. this year, to help it fulfill online orders.

“Over time, we’ll evaluate the program against our broader set of assets with the aim of improving the value proposition and deepening our relationship with customers, including earning a greater share of wallet,” said Walmart CEO Doug McMillon on the retailer’s third quarter earnings call last month.

DISCUSSION QUESTIONS: Will the removal of a purchase minimum aid Walmart’s push to add members to its Walmart+ program? How does Walmart+ affect the company’s ability to compete with retailers not named Amazon?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Removing the purchase minimum tears down a psychological barrier more than anything. "
"The next step? An incentive to either fill the basket with more goods, or an offer to wait for slower delivery..."
"Walmart is banking on its grocery and gas perks to drive subscribers but they will need something more to pull customers away from Amazon Prime in the long run."

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19 Comments on "Will ending minimum purchases turn Walmart+ into a serious Amazon Prime rival?"


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Mark Ryski
BrainTrust

Removing the minimum will help Walmart add new customers without a doubt. The battle for consumers is a slugfest and the removal of the minimum order is part of this. This latest move will create even further distance between Walmart, Amazon, Target and virtually everyone else.

David Naumann
BrainTrust

Removing the purchase minimum for free two-day deliveries will definitely help the Walmart+ program compete more effectively with Amazon Prime. This is one of the most powerful benefits that Amazon Prime customers value and to appeal to more customers Walmart+ needs to be on par with Prime. It probably isn’t enough to make Amazon Prime customers switch to Walmart+, but it may entice many to be members of both.

Neil Saunders
BrainTrust

This will certainly help Walmart grow its program and its e-commerce business, so it is a good move. However this doesn’t suddenly make Walmart more of a serious threat to Amazon. Amazon’s Prime subscription program is primarily successful because of all the benefits it offers, including content, not just because of free shipping. If Walmart wants to maximize the membership of its scheme it probably needs to add more bells and whistles.

David Leibowitz
BrainTrust

It’s a good first step – customers demand this feature, so it will help Walmart remain competitive.

The next step? An incentive to either fill the basket with more goods, or an offer to wait for slower delivery (Amazon offers a digital coupon if you opt out of next-day delivery and choose to wait a few days). Both of these are good strategies to increase customer loyalty and, more importantly, lower the delivery costs to retailers.

Gary Sankary
BrainTrust

This is a good move for Walmart, especially against retailers not named Amazon. I think this positions them near the top of that list. That pesky minimum has been a barrier for some customers, full disclosure myself included. The annual fees feel reasonable but I’d still need to purchase a lot of Walmart products to make this work. And that’s where the real competition comes into play. And honestly, I don’t think this moves the needs all that much against Amazon and its value proposition when you include Amazon Prime Video and streaming music, the Alexa devices, etc. Since this strategy depends on their being able to scale this at mass, Walmart has a difficult challenge ahead of them.

Dave Bruno
BrainTrust

This move is certainly good for Walmart+ members, and likely good for Walmart as well, as it will for sure help them increase share against Amazon Prime. It’s certainly not good, however, for smaller retailers who will keep getting their margins hammered by free shipping expectations, and it is most definitely not good for the environment, as many more millions of one-item shipments are destined for our roads and skies very soon.

Gene Detroyer
BrainTrust

Because of the skill both Amazon and Walmart have in logistics, it will even be difficult for other big retailers to compete.

Carol Spieckerman
BrainTrust

The beauty of Walmart+ and other bundling programs is that they can be tweaked in any number of ways as customer data is gathered. That Walmart is already adjusting this new offering attests to Walmart’s agility and test-and-learn sensibilities. Removing the purchase minimum tears down a psychological barrier more than anything. Shoppers won’t have any hurdles to clear when considering where to shop and once they are “in,” will likely spend over the previous minimum. It’s a big bet that should pay off in more business for Walmart, especially as it continues to refine and optimize its e-commerce platform.

Georganne Bender
BrainTrust

When Walmart decides to do something the giant retailer is usually successful. Consumers will respond to free delivery, free same-day delivery (even with a minimum), deals on gas, and easy scan and go checkout in the stores. There are a few more things to add in order to compete at the same level, but I’d say Walmart is about to give Amazon a run for it’s money.

Gene Detroyer
BrainTrust

On average we order once a day from Amazon. Sometimes we order separately three or four times in one day. I run out of batteries, I order them. My wife needs a particular lotion, she orders it. My printer says it is time to restock ink, I order it. Then my wife orders a cleaning product. Four separate orders, all in one day. Amazon is essentially our stock room. Ease and convenience.

This is a benefit that every other retailer (not named Amazon) will have a hard time matching. It will make online a two-horse race, but until Walmart can match the omnipresence of Amazon, they will not challenge the big guy for a long, long time.

Evan Snively
BrainTrust

To answer the question in the article title: No.

I’m also not sure that it will add to the membership base – but it will help retain customers that are already members. Frequency of orders will likely increase for the member base and it could certainly alter some purchasing habits. Whether Walmart is ready to handle those changes while still retaining margins remains to be seen.

Steve Montgomery
BrainTrust

It removes a barrier to shop for its potential customers and reinforces a barrier to entry for its competitors. The net result will be more customers and a new big three.

Ricardo Belmar
BrainTrust

There is no doubt that access to free next-day and two-day shipping is a perk consumers want from a paid loyalty program. This will help bring in new subscribers to Walmart+ but I don’t believe this will happen in very large numbers. Walmart is banking on its grocery and gas perks to drive subscribers but they will need something more to pull customers away from Amazon Prime in the long run.

Karen Wong
BrainTrust

If taking market share is the objective it makes sense but it’s likely that Walmart will pay a heavier price on the bottom line vs. Amazon given the difference between their core customer base. And no minimum free shipping isn’t the key value proposition it used to be with Amazon.

Joan Treistman
BrainTrust

Currently consumers go directly to Amazon to check out product and brand availability. With Prime you can order on the spot. But sometimes you may be willing or think it makes sense to take your time (nanoseconds?) to compare prices, brand and quantities on various websites or simply type in the product/brand in Google. Hunkered down during the pandemic we’ve learned that we can have instant gratification. Over the months it’s become clear that instant isn’t always the best solution. Here’s where Walmart can make a dent very easily, i.e. offering an option for comparison. The more often shoppers see they have an advantage by choosing between sources, the more Walmart gains in stature as an Amazon, Target, etc. rival. Ultimately, it’s how well Walmart satisfies consumers’ needs and wants and stays current as needs and wants morph. We know the demand is there.

storewanderer
Guest
2 months 26 days ago

This should have been done when the program was rolled out — it was a dumb (cheap?) oversight to not include it in the first place. I’d call it an excellent enhancement, but it should have been there in the first place, given what they are charging for the program.

Shep Hyken
BrainTrust

This is a game changer for Walmart. There are certain areas that add value to the experience. Free shipping was one of them. Amazon owned that and has set the bar. Now we see other major retailers, such as Walmart, working to hit the bar. Good for them. This also helps them compete with others (not named Amazon). But realize that these other companies are looking to do the same thing as Walmart.

Brian Numainville
BrainTrust

Certainly a positive move for Walmart (and they should have done it on the first day of the program) but Amazon’s benefits are still much better. Not likely going to create a lot of switching from Amazon to Walmart, but may be attractive in gaining new customers that don’t want or need the extra Amazon offers.

Rachelle King
BrainTrust

This is like one of those “E” for effort deals; it’s a really nice move but probably won’t move the needle much. Trying to lure customers from Prime is a lofty goal. No doubt, Walmart keeps making incremental gains in the right direction but subscription services require commitment and commitment requires loyalty, which takes time. The immediate impact may be existing subscribers placing more frequent orders. New subscribers that are not primed-out will evaluate Walmart against a sea of options with similar bells and whistles currently in market.

wpDiscuz
Braintrust
"Removing the purchase minimum tears down a psychological barrier more than anything. "
"The next step? An incentive to either fill the basket with more goods, or an offer to wait for slower delivery..."
"Walmart is banking on its grocery and gas perks to drive subscribers but they will need something more to pull customers away from Amazon Prime in the long run."

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