Could Walmart Plus compete with Amazon? Retail industry responds

Jessica Paige 2 September 2020 (Last Updated September 2nd, 2020 18:16)

Retail Insight Network reached out to experts across the retail industry to find out how Walmart Plus could compete with Amazon.

Could Walmart Plus compete with Amazon? Retail industry responds
“Free delivery is becoming a customer expectation, not a differentiator.” Image Credit: Walmart

US-headquartered multinational retailer Walmart has announced plans to launch a membership programme, Walmart Plus, nationwide from 15 September.

This announcement comes less than a week after Walmart declared it would partner with Microsoft to bid for TikTok US.

As part of the membership, Walmart Plus will offer fuel discounts and unlimited free deliveries. Members will also have the option to have same-day delivery on orders and have access to a “Scan & Go” in-store app, which allows members to scan items and checkout using their phones in Walmart stores.

Walmart Plus will cost $98 annually or $12.95 monthly. The free delivery option will save customers the usual delivery fee of between $7.95 and $9.95 per order.

Walmart chief customer officer Janey Whiteside said: “Members can shop more than 160,000 items at in-store prices, whether that be fresh produce, meat, and seafood to everyday essentials like toothpaste and toilet paper, as well as some toys, electronics, and other general-merchandise items, which can be delivered straight to their door as soon as the same day.”

Will Walmart Plus compete with Amazon Prime?

With this announcement, retail industry experts are already wondering whether the new membership programme would place Walmart as a strong competitor to global giant Amazon.

Amazon Prime costs $119 annually, offers free two-day shipping, as well as free grocery delivery from Whole Foods stores and Amazon Fresh. It also offers benefits such as a streaming service of movies, TV shows, and music, as well as exclusive shopping deals, such as unlimited reading.

Software company Software AG senior director of industry solutions Oliver Guy told Retail Insight Network: “Walmart is doing two things with the launch of Walmart Plus: it’s capitalising on the move to online grocery shopping and it’s getting into the data business.

“Fewer people are going into stores, so launching a good value, comprehensive online delivery service will help to shore up its customer base. Once it’s done that, the data it can collect on all of those transactions will give it the power to capitalise on a whole host of new opportunities. This is where the comparison to Amazon is so apt.”

Whiteside, however, said that Walmart is not focusing on becoming a competitor. She said: “We’re not launching Walmart Plus with the intent to compete with anything else. We’re launching it to meet the needs of our customers, and it really was designed to make their busy lives easier.”

Retail Insight Network reached out to experts across the retail industry to find out whether or not Walmart Plus could even be considered competition for Amazon, if it could ever compete with Amazon Prime, and what it would have to do to become a bigger competitor.

How Walmart could obtain a “competitive advantage”

Software as a service (SaaS) platform Productsup CMO Marcel Hollerbach told Retail Insight Network that being “local to its customers” and offering a wide range of brands and services would give the retailer “the competitive advantage it needs”.

Hollerbach said: “Memberships are an effective way of getting customers ‘locked-in’ to encourage them to shop on the platform more frequently. As Amazon has had ongoing success with its membership programme Prime, it was only a matter of time before other retailers jumped on the bandwagon and launched their own versions. Walmart has one of the biggest networks of physical stores, so in order to compete with Amazon, it has to capitalise on that.

“Being local to its customers, whilst also being able to offer a wide range of brands and services, could give Walmart the competitive advantage it needs. I expect the company to keep building on its digital services while also offering in-store perks, such as discounts on gas or the drive-in film experience. The future of retail is about creating a compelling customer experience, both offline and online, and Walmart seems to have understood that.”

“To compete, Walmart must focus on differentiation”

UK-based technology and engineering consultancy BJSS retail principal Ralph Robinson told Retail Insight Network that Walmart needs to focus on differentiation if it wants to compete with Amazon.

Robinson said: “With a vast physical presence, loyal customer base and exceptional buying power, Walmart Plus definitely has the ability to narrow the gap with the retail giant that is Amazon, but by how much? On the one hand, Amazon has a 15-year head start, an established, reliable and efficient delivery model, including two-hour grocery deliveries, and offers fringe benefits like Prime Video that has already locked in millions of customers – to whom the delivery services are merely a bonus.

“On the other hand, Walmart is gambling that its 160,000 SKU grocery range – nearly double that of Amazon-  and five cent-per-gallon fuel discount will win it subscriptions. However, with road traffic still lagging, the launch of Amazon Fresh grocery offer, and customer ‘subscription fatigue’ it’s unlikely this endeavour will put a dent in Amazon’s growth trajectory.

“To compete, Walmart must focus on differentiation, for example, by leveraging its vast store network to offer eco-friendly last-mile delivery, free in-store consultations, or discounts on its health and financial services which Amazon simply can’t offer … at least not yet!”

Free delivery is becoming a customer expectation, not a differentiator.”

Global digital transformation agency Somo SVP North America Jason Hooper told Retail Insight Network that Walmart Plus will need to offer more to compete with Amazon Prime, as free delivery is something that has become expected in retail.

Hooper said: “To truly be seen as competition to Amazon, [Walmart Plus] will need to do more. Walmart Plus may be looking to compete in the e-commerce space by extending its services to the final mile delivery, but free delivery is becoming a commoditised expectation of customers, not a differentiator. Amazon offers so much more than Walmart does to-date. It has created a digital ecosystem that interacts with our day-to-day lives, through the web services it offers, the products we have in our homes, its streaming services or the marketplace of sellers itself.

“The markets will react positively to Walmart looking to take further steps to modernise its existing service, but to truly compete with the technology giants, such as Amazon, it will need to further digitalise its business model to look for new areas of innovation outside of the traditional business norms.”