Walmart+ and the evolution of digital commerce
After months of speculation, discussion and growing questions about when this was actually going to happen, Walmart on Tuesday (September 1) officially announced a launch date for its Walmart+ subscription offer.
“Life is more complicated than ever” Janey WhitesideWalmart’s chief customer officer, said in announcing new product. “Walmart+ is designed to make it easy, giving customers the option of not having to sacrifice cost or convenience. We know that purchasing should meet customer needs, not the other way around. We’ve always been a champion for the right item at the right price, but now it’s more than that. We also have the right purchasing solutions at the right time. »
Walmart+ offers shoppers a host of additional services – free same-day delivery, Scan & Go on the Walmart app, and a 5-cent-per-gallon rebate on gas. The service will be available to US customers on September 15. After a 15-day free trial, customers can either pay for a full year of Walmart+ upfront or purchase the service by the month (similar to Amazon Prime’s offering).
Walmart+ is coming to market later in 2020 than originally planned. The retailer originally planned a March launch, but COVID-19[female[feminine caused delays as Walmart had to pivot quickly to reformat its operations to meet health and safety standards.
Take Amazon Prime
The new offering represents Walmart’s most direct response yet to Amazon Prime, the 15-year-old juggernaut of a subscription service that currently claims around 150 million members worldwide.
Prime is more expensive than Walmart+ when paying yearly – $112 per year for the Amazon product versus $98 for the Walmart one. However, the monthly fee is basically the same for both products, at just under $13 every 30 days.
Amazon Prime customers rarely complain about not getting value for money, as Prime comes with free next-day delivery of goods, free same-day grocery delivery, a huge catalog of options for streaming and discounts at Amazon-owned Whole Foods. chain. And for whatever Prime customers get, they give a lot back to Amazon in the form of particularly inflated spending. On average, U.S. Amazon Prime members spend approximately $1,400 per year on the site, up from just $600 for non-Prime US customers.
Walmart has good reason to want to enter this market, because more than half of its spending families also use Amazon Prime. According to VoiceAmazon is using Prime to move economically struggling families away from in-store shopping at Walmart to digital commerce journeys at Amazon.com.
Grocery has until now been Walmart’s firewall, as the chain has historically controlled a larger grocery market share than Amazon. But the pandemic has significantly boosted Amazon’s grocery revenue as consumers overcome their historic reluctance to buy food online.
Amazon recently reported that online grocery sales triple year-over-year in the second quarter, prompting the e-commerce giant to increase its grocery delivery capacity by more than 160%.
And given this growth, Amazon is stepping up its efforts to further capture the grocery market. For example, the e-commerce giant recently launched its first Amazon Fresh physical grocery storea Los Angeles supermarket separate from Whole Foods.
The store aims to provide consumers with a grocery experience tailored for the digital age. There are Alexa-enabled kiosks for giving directions to items and offering shopping suggestions, as well as a dedicated area for digital order pickups. The store also offers digitally connected shopping carts (called “Dash Carts”) that record what consumers are removing from shelves so customers can check out and pay electronically through Amazon Pay accounts without having to go through cashiers. .
The launch of Walmart+ is one of many attempts by Walmart to combat such attempts by Amazon to enter its territory. The pandemic also boosted Walmart’s grocery performance in 2020, although Walmart did not provide details in its latest quarterly results.
However, CEO Doug McMillion said on a call with analysts that grocery store performance was a major contributor to the chain’s 97% growth in e-commerce results. He also said grocery shopping contributed to a 27% increase in average basket size.
Walmart also recently announced a partnership with Instacart to offer a same-day delivery service that will rival Amazon’s similar offering, made through the Whole Foods and Amazon Fresh sites. Walmart is testing the new service in four markets in California and Oklahoma, with a view to rolling out nationwide in 2021.
“The new partnership brings thousands of items – from groceries, alcohol and pantry staples to home decor and improvement, personal care, electronics and more – at everyday low prices from Walmart stores to customers’ doorsteps in as little as an hour,” Instacart said. in a report.
The road to follow
Walmart’s digital expansion continues. For example, reports emerged last week that Walmart may be joining efforts. to buy US operations of social media giant TikTok.
Chinese TikTok owner ByteDance is facing a Executive Decree by President Donald Trump to ban TikTok in America unless ByteDance sells off the US arm of the social media platform amid allegations that the Chinese government may be using TikTok to obtain Americans’ personal data. It looks like Walmart might be partnering up with Microsoft bid for TikTok’s US operations.
“We believe that a potential relationship with TikTok US in partnership with Microsoft could … provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party market and advertising business,” he said recently. the chain in a declaration. “We believe a partnership between Walmart and Microsoft would both meet the expectations of US TikTok users while addressing the concerns of US government regulators.”
It’s too early to tell if such a deal will materialize, but it shows that Walmart isn’t resting on its laurels or wanting to think outside the box in the post-pandemic era. Instead, the channel is committed to capturing the omnichannel consumer.
“Customers know they can trust and rely on us,” Walmart’s Whiteside said. “Walmart Plus (or +) will bring together a comprehensive set of benefits where we see our customers’ greatest needs and where our scale can deliver solutions at unprecedented value.”