Walmart's ShippingPass program — a fee-based, two-day shipping program — will never make it past the shipping phase.
Piloted as a possible competitor to Amazon Prime, the world's largest retailer has decided to go a different way with enticing consumers to its e-commerce brand. Instead of a membership program, Walmart is dropping the free shipping threshold from $50 to $35. And the shipping is faster — in the past, the $50 expenditure only netted consumers 3-5 day free shipping; going forward, $35 will entitle consumers to 2 day shipping.
Those who paid for a ShippingPass will get a full refund.
“In this day and age, two-day shipping is really just table stakes,” Lore, now president and CEO of Walmart U.S. eCommerce, said Monday. “We don't think it's necessary to charge a membership [fee] for it.”
Walmart's service was cheaper than Amazon's — $50 a year vs. $99 — but it was much less robust as it lacked add-ons like music and video streaming or unlimited cloud-based photo storage. There also are members-only deals at Amazon, and it recently introduced a credit card that gives Prime members 5 percent back on their Amazon purchases.
Plus, Walmart is really late to the gate — about 1/3 of Walmart customers are already logged into Prime — and it is hard to imagine a switch given that Prime's renewal rate is in the 90 percent range, according to Kantar World Panel.
Walmart's new program does have limits, most notably with product assortment — Walmart's offer covers about 2 million items, while Amazon Prime offers access to about 40 million. But Walmart is confident that customers won't really feel much of a lack there.
“There won't be too many products that you'll want that won't be available [for] two-day shipping,” Lore said, adding that the items will be skewed toward everyday essentials including pet food and cleaning supplies.
Walmart's lower spending threshold comes as retailers including Target and Urban Outfitters have said that a larger-than-anticipated acceleration in their online sales dented their margins over the holidays.
But Walmart, with its massive logistics network, believes it can do it that much better.
“It's not going to affect our pricing at all. In fact, we're going to look to get more aggressive on the price side,” Lore said. He said more changes to Walmart's digital strategy will be announced shortly.
Looks like the e-commerce wars will get more interesting this year after all.