Amazon’s online retail practices are second to none. That’s no big secret. The best example is their approach to logistics. Their supply chain is a technological marvel, revolutionizing the concept of delivery. It also serves as one of their biggest differentiators.
Two-day, one-day, same-day shipping at no extra charge (beyond a simple subscription fee). Anything and everything at the consumer’s fingertips. More than 10 million items available for free, one-day shipping. An additional three million more are available same-day. All this via their subscription-based service, Amazon Prime.
It’s brought the idea of free, expedited shipping to the mainstream. While also helping put Amazon first in the consumer mindset when it comes to online retail destinations. Research starts there, and transactions often end there.
Despite all this, if consumers find an item at a lower price elsewhere guaranteeing a similar delivery speed, their allegiance to Amazon evaporates quickly.
Enter Walmart+, Walmart’s oft-delayed, subscription-based service designed to compete with Amazon Prime. The biggest selling point is, you guessed it, free shipping. They absorb the costs associated with the logistical nightmare that is getting a single package of baby wipes to the foyer of your apartment building in under 24 hours, in exchange for a yearly (or monthly) fee.
With the launch of Walmart+, the world’s largest in-store retailer is going head-to-head with the world’s largest online retailer. Despite all the talk about Amazon’s stock price, Jeff Bezos’ net worth, etc., Walmart is still the bigger sales draw. They nearly doubled Amazon’s revenue in 2019. But keep in mind, Amazon still owns the online arena, meaning Walmart will be taking the fight to Amazon’s doorstep with Walmart+.
This is a world-class title bout and, with any such event, the two combatants need to be measured against each other before duking it out. So, let’s look at the tale of the tape:
Experience: Amazon has been supporting its highly successful Prime efforts for roughly 15 years now. Walmart+ is brand new, twice delayed, and rather unproven. But let’s face it, the pandemic-related delays were out of their control. Amazon ran into similar issues, pausing one to two-day shipping for most items earlier in the pandemic to safeguard warehouse shelf space/delivery routes for higher priority items. The pandemic still has the potential to wreak serious havoc on both retailers, but Amazon has more experience weathering the storm, if you will. Edge: Amazon
Affordability: Prime comes in at $115/year, while Walmart+ is priced slightly lower at $98. Both price points often pay for themselves in shipping costs and perks alone, making cost negligible. Edge: Push
Product Availability: Amazon Prime has nearly 20x the sheer number of products eligible for same-day delivery as Walmart+. Walmart will surely add more as it goes, but in the early stages, this one’s a no-brainer. Edge: Amazon
Grocery-Related: Amazon owns Whole Foods. Prime members in certain locations can get 2-hour delivery free of charge. They offer similar online delivery perks via Amazon Fresh to certain locales. Amazon also recently opened their very first Amazon Fresh location in Los Angeles. Several others will be rolling out in Illinois and more in California soon after. They’re designed to provide consumers a layer of convenience and technology beyond the typical grocery interaction, while also offering much more competitive pricing than your typical Whole Foods.
Walmart+ offers grocery delivery as well, with prices often much lower than Whole Foods. They’re also the largest grocer in the country, with an estimated 26% of the U.S. grocery market share. Their sales are more than double Kroger’s, and quadruple Albertson’s. But with more Amazon Fresh locations potentially on the horizon, they could see their market share start to dwindle. Edge: A push… for now
Additional Perks: Both sides boast an array of peripheral perks poised to lure consumers in. Amazon gives members free access to their Amazon Prime streaming service (The Boys alone is worth the price of admission), additional discounts at their retail storefronts, and more. Walmart+ offers subscribers gas discounts ($0.05 per gallon), in-store wait-free checkout and scan-as-you-go options, and other benefits. Overall, a consumer’s interest in these additional perks will depend on their needs, life stage, location, etc. Edge: Push
After sizing each participant up, it looks as though Amazon holds the advantage. The experience factor alone will make it difficult for Walmart to come close to unseating such a juggernaut. A lot can change in a short period of time, though. As noted, Walmart+ is incredibly unpredictable.
Even the seemingly invincible force that is Amazon felt the pain associated with the pandemic. Their next-gen logistical efforts were heavily impacted by a) demand and b) unpredictability. If a similar COVID-induced panic befalls the U.S. between now and end of year, Amazon could falter. And you can guess who will be there to round up those disenfranchised consumers unwilling to wait an additional day for baby wipes.
It’s the oft-unspoken truth in today’s retail world: there’s no reason for loyalty. If a consumer’s preferred retailer doesn’t carry something, or they find it cheaper somewhere else, there’s little to no hesitation before making a purchase-based switch. Part of the reason Walmart saw such fantastic growth in online sales during the early stages of the pandemic (aside from online skyrocketing in general) was due to Amazon’s inability to fulfill non-essential items. People that normally bought through Amazon ended up going elsewhere because they were unable to fulfill their needs at the velocity they’ve become accustomed to. A velocity Amazon has historically made table stakes.
If people experience the slightest hint that product delays are coming (especially approaching holiday), they’ll bail on Amazon for alternate retailers. This doesn’t necessarily mean they’ll cut ties with Prime, but it also doesn’t mean they won’t give Walmart+ a whirl either. As noted, the shipping-related savings often covers the cost alone. This means that the same Americans signing up for Prime every year may realize having another option with the same benefits might be worth it.
At the very least, this will make for an (even more) interesting holiday shopping season.
