Customers’ reception of the offer will serve as a test for Walmart as to whether the program can gain the kind of traction it would need to be able to compete with Amazon’s more established membership program. And it represents just one of many strategic pushes by the big-box retailer to become a more formidable player in e-commerce.
Shipping Pass easily undercuts Prime on price: It is $49 per year, compared to $99 for Amazon’s program. And yet Walmart’s offering is far narrower: The essence of Shipping Pass is free two-day shipping on bestselling products. Prime also makes that promise, but has grown to include other perks such as music and movie streaming, early access to deals, and, in certain markets, one-hour delivery. (Jeffrey P. Bezos, the chief executive of Amazon.com, owns The Washington Post.)
For a long time, customers who signed up for Shipping Pass often had to sit tight on a waiting list before receiving access. More recently, Walmart has moved to allow customers to register and instantly receive the benefits.
Walmart will face no shortage of challenges in trying to lure shoppers to sign up for Shipping Pass. Prime debuted back in 2005, and analysts have estimated some 40 million Americans have memberships. In other words, many online shopping devotees have already become accustomed to turning to Amazon first, and they’ve made a habit of an unbundled approach to online ordering that Prime encourages, in which they might snap up a book one moment, only to follow with an order of paper towels several minutes later.
So Walmart will have to persuade those people to jump ship for Shipping Pass, or cultivate a new group of shoppers to test the appeal of this kind of model.
The Shipping Pass announcement suggests that Walmart is looking for something of a reprisal of the summer smackdown that the two retailing giants had last July. Amazon is poised to hold its Prime Day sale in mid-July, a Black Friday-like deals bonanza that the company held for the first time last year. Walmart answered the 2015 Prime Day sale with some digs at Amazon and a massive deals blitz of its own, and it appears Walmart is trying to steal some of Amazon’s thunder again. In addition to the free trial of Shipping Pass, Walmart promised in a company blog post that shoppers will see “some amazing items at great prices kicking in” starting July 1.
Walmart also appeared to take a shot at Amazon’s “lightning deals,” which are discounts that last for only a short period of time — perhaps only minutes or hours. These kinds of deals were a staple of the Prime Day event last year.
“Walmart is known for everyday low prices, and when we have a special price, it isn’t just for a fleeting moment,” Fernando Madeira, chief executive of Walmart.com U.S., wrote in the post.
With its relatively low price, Shipping Pass may prove particularly appealing to the value-oriented shoppers that have made Walmart the goliath it is. And the new service might also find a receptive audience with consumers who like to buy online but would like the option of being able to return items to a store instead of by mail.
The experimentation with Shipping Pass is part of a broader push by Walmart to step up its e-commerce game. Last year, its online sales totaled $13.7 billion, adjusting for currency fluctuations. That’s a minuscule slice of the $499.4 billion in sales the company rang up in 2015. Some of its efforts to boost digital sales include the rapid expansion of grocery pickup, in which customers place an order online and pick it up curbside at a nearby store. It is also testing an offering in which it is partnering with Uber and Lyft to deliver online grocery orders.