Retail

Walmart+ And The Changing Digital Commerce Landscape

Walmart

After months of speculation, discussion and mounting questions about when it was actually going to happen, Walmart on Tuesday (Sept. 1) officially announced a launch date for its Walmart+ subscription offering.

“Life feels more complicated than ever,” Janey Whiteside, Walmart’s chief customer officer, said in announcing the new product. “Walmart+ is designed to make it easier, giving customers an option to not have to sacrifice on cost or convenience. We know shopping should fit customers’ needs, not the other way around. We have always been a champion for the right item at the right price, but now it’s more than that. We have the right shopping solutions at the right time, too.”

Walmart+ offers shoppers a whole host of extra services — free same-day delivery, Scan & Go on the Walmart app, and a 5-cent-per-gallon discount on gas. The service will be available U.S. customers on Sept. 15. After a 15-day free trial period, customers can either pay for a full year of Walmart+ up front or buy the service by the month (similar to Amazon Prime’s offer).

Walmart + comes to the market later in 2020 than many initially expected. The retailer originally planned a March launch, but COVID-19 caused delays as Walmart had to quickly pivot to reformatting its operations to conform with health and safety standards.

Taking On Amazon Prime  

The new offering represents Walmart’s most direct answer to date to Amazon Prime, the 15-year-old juggernaut of a subscription service that currently claims roughly 150 million members worldwide.

Prime costs more than Walmart+ when one pays by the year — $112 annually for the Amazon product vs. $98 for the Walmart one. However, the monthly charge is basically the same for both products at just under $13 every 30 days.

Amazon Prime customers rarely complain they aren’t getting a good value, as Prime comes with free next-day delivery of goods, free same-day grocery delivery, a large catalog of streaming-media options and discounts at the Amazon-owned Whole Foods chain. And for all that Prime customers get, they give back plenty to Amazon in the form of notably inflated spending. On average, U.S. Amazon Prime members spend roughly $1,400 a year on the site, vs just $600 for non-Prime U.S. customers.

Walmart has good reason to want to break into that market, as more than half of its spending families also utilize Amazon Prime. According to Vox, Amazon has been using Prime to move economically troubled families away from shopping in store at Walmart to taking digital-commerce journeys on Amazon.com.

Groceries have so far been Walmart’s firewall, as the chain has consistently controlled a larger grocery-market share than Amazon has. But the pandemic has given Amazon’s grocery revenues a tremendous boost as consumers overcome their historical reticence around shopping for food online.

Amazon recently reported that online grocery sales tripled year over year during Q2, prompting the eCommerce giant to increase grocery-delivery capacity by more than 160 percent.

And given that growth, Amazon is doubling down on attempts to snap up more of the grocery market. For instance, the eCommerce giant recently launched of its first Amazon Fresh brick-and-mortar grocery store, a Los Angeles supermarket separate from Whole Foods.

The store aims to offer consumers a grocery-shopping experience custom constructed for the digital age. There are Alexa-enabled kiosks to give directions to items and offer shopping suggestions, along with a dedicated area for digital order pick-ups. The store also features digitally connected shopping carts (called “Dash Carts”) that log what consumers take off the shelves so customers can electronically check out and pay via Amazon Pay accounts without dealing with cashiers.

The launch of Walmart+ is one of Walmart’s many attempts to battle back against such Amazon attempts to cut into its turf. The pandemic has boosted Walmart’s 2020 grocery performance  as well, although Walmart didn’t break out specifics in its latest quarterly results.

However, CEO Doug McMillion did say in a call with analysts that grocery performance was a major contributor to the 97 percent growth in the chain’s eCommerce results. He also said groceries helped spark a 27 percent increase in average basket size.

Walmart also recently announced a partnership with Instacart to offer same-day delivery service that will rival Amazon’s similar offering, done via Whole Foods and Amazon Fresh locations. Walmart is testing the new service in four California and Oklahoma markets, with an eye toward a national rollout 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’ doors in as fast as an hour,” Instacart said in a statement.

The Road Ahead  

Walmart’s digital expansion remains ongoing. For example, reports emerged last week that Walmart might be getting in on efforts to buy social media giant TikTok’s U.S. operations.

TikTok’s Chinese owner ByteDance faces an executive order from President Donald Trump to ban TikTok in America unless ByteDance sells the social-media platform’s U.S. arm amid allegations that the Chinese government could use TikTok to get Americans’ personal data. It’s looking like Walmart might pair up with Microsoft to bid for TikTok’s U.S. operations.

“We believe a potential relationship with TikTok U.S. 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 marketplace and advertising businesses,” the chain recently said in a statement. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of U.S. TikTok users while satisfying the concerns of U.S. government regulators.”

It’s too early to tell whether such a deal will happen, but it shows that Walmart isn’t resting on its laurels or unwilling to think outside the box in the post-pandemic age. Instead, the chain is committed to capturing the omnichannel consumer.

“Customers know they can trust us and depend on us,” Walmart’s Whiteside said. “Walmart Plus (or +) will bring together a comprehensive set of benefits where we see the greatest needs from our customers, and where our scale can bring solutions at an unprecedented value.”

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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