Walmart is upping the stakes in its war for retail dominance with reigning eCommerce champion Amazon by expanding the rage of their free two-day shipping.
Going forward, Walmart will allow any U.S. customer with a $49 per year members ship to access its free two-day shipping, making it about half as expensive as Amazon's $99 Prime program. Two-day shipping had been available before now, but only to a limited number of customers.
“ShippingPass is about half the price of similar programs out there,” Fernando Madeira, CEO of Walmart.com’s U.S. operation said in a blog post to announce the expansion, a nod that Amazon Prime is in its sights.
Amazon has so far been well ahead of Walmart on the eCommerce curve - but the world's largest retailer by sales has battled back by improving its fulfillment capabilities and leveling up its ability to compete in the world of digital retail. That move has been necessitated by a shifting market that has left Walmart with sluggish sales growth.
All in all, Walmart has dropped around $2 billion on digital commerce related upgrades - a sign the firm has "realized they can’t bury their head in the sand like an ostrich,” according Foster Finley, managing director at global consulting firm AlixPartners.
Two-day shipping, he notes, is “tacit recognition that they simply can’t ignore the fact that Amazon and businesses like Amazon have mentally raised the bar in the minds of consumers.”
Free, fast shipping is a challenge. Consumers more or less demand it at this point - but keeping up with it can be expensive and require very serious infrastructural development. It can also be highly loss making- particularly on low-margin items like soap or spaghetti that are being shipped to remote parts of the country. Amazon, with its higher margin business like AWS and "Fulfillment by Amazon," can subsidize those losses in the name of making its platform as a whole more desirable.
In response to a question about Walmart’s program, Amazon said it believes its Prime program is “the best deal in the history of shopping.”
Walmart isn't just going with faster, according to the recent announcement - Walmart is also going with more. Walmart's website has around 10 million products available - as opposed to the 120,000 or so at the average Supercenter. Amazon, on the other hand, has hundreds of millions of products.