Walmart+ Set to Take on the Mighty Amazon Prime

Walmart

According to news reports, Walmart will soon launch its membership program – Walmart+. The subscription service will reportedly cost $98 a year.

Walmart+ is the Bentonville-based behemoth’s move to counter the famous Amazon Prime. It is expected to include deals like same-day delivery of grocery and other general merchandise, early access to product deals, and discounts on fuel at Walmart gas stations, among other benefits.

Amazon Prime has been around for 15 years and has around 150 million subscribers globally. A Prime member, who pays $119 for an annual subscription, has access to express delivery of goods, TV shows, music, and a host of other perks. Prime members shop more often and are loyal to Amazon than non-Prime members. A chunk of the target audience for Walmart+ is the same set of families who are Amazon Prime users. This could potentially be an area of concern for Walmart.

But on the other hand, Walmart’s sales have seen a huge jump due to the Covid-19 pandemic. A few months ago, the company announced an extraordinary Q1 result where its comparable-store sales, a key retail metric, increased 10%. Additionally, Walmart’s online sales in the US jumped by 74% in Q1. While Walmart is pushing the online bracket, Amazon still has a huge lead in the online space.

Walmart’s trump card during the pandemic has been grocery. The company combined its colossal physical footprint, product availability, and increasing online presence to move ahead of the competition in the E-grocery sector. Walmart+ might also target the grocery and essentials market to kick things off. The subscription is soon expected to include general merchandise too.

“The top-growing E-commerce categories will be food and beverage at 58.5% and health/personal care/beauty at 32.4%, as Americans turn to online ordering for household essentials. Apparel and accessories, the second-largest E-commerce category in overall sales, will grow just 8.6% as consumers shift spending from more discretionary, nonessential categories,” said a recent eMarketer’s 2020 forecast report. “For the first time, Walmart will surpass eBay as the No. 2 E-commerce retailer in the US.”

According to the same eMarketer report, Amazon still retains the top spot. Amazon Prime is a key reason for its dominance.

“Everything we’re seeing with E-commerce is unprecedented, with growth rates expected to surpass anything we’ve seen since the Great Recession,” said eMarketer principal analyst at Insider Intelligence, Andrew Lipsman, in the forecast report. “Certain E-commerce behaviors like online grocery shopping and click-and-collect have permanently catapulted three or four years into the future in just three or four months.”

Considering the overall scenario, this just might be the right time for Walmart to come up with its subscription service as people are shopping online like never before.

Logistics will play a key role in enabling express and same-day deliveries. Moreover, as competition to gain customer loyalty intensifies, logistics can be the real differentiator in ensuring customer satisfaction. Route optimization for on-ground delivery personnel might go a long way in ensuring SLA adherence. Track and trace capabilities and analytics will help in coming up with better strategies.

Locus offers smart logistics solutions to enterprises in the e-commerce and retail supply chain to improve last-mile deliveries with greater cost-efficiency. Get in touch with us for a demo.

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