Shoppers are seen wearing masks while shopping at a Walmart store in Bradford, Pennsylvania, July 20, 2020.
Brendan McDermid | Reuters
Walmart will launch its much-anticipated membership program on Sept. 15, looking to build on the strength of its grocery business and customers’ desire for more convenient ways to shop.
The subscription service, however, is notable for what it won’t include. It won’t have the feature that its rival, Amazon Prime, touts: free shipping for every item.
Walmart+ members will get unlimited free delivery, discounts of as much as 5 cents a gallon for fuel and access to a Scan & Go app that allows shoppers to skip the checkout line. But they will still have to meet a $35 minimum for each online order to avoid fees, whether it’s shipped to the home or dropped off at their door. It will cost $98 a year, or $12.95 a month.
Amazon Prime costs $119 a year, or $12.99 a month, and includes free two-day shipping and some same-day shipping, without a minimum. Grocery delivery through Amazon Fresh is free, if customers meet a $35 minimum and are in eligible areas. It also includes its ad-free music service and video streaming service, with a large library of TV shows and movies — including award-winning originals like “The Marvelous Mrs. Maisel.” Customers can also get some discounts at Whole Foods.
More share of wallet
Chief Customer Officer Janey Whiteside said the company wants to deepen loyalty among those who already shop at its more than 4,700 U.S. stores and on its website.
“This is about really doubling down with the customers we have and getting more share of wallet and more share of mind,” she said on a call with reporters Monday.
She said the program is not an answer to Amazon Prime or any other competitor.
“We’re not launching Walmart+ with the intent to compete with anything else,” she said. “We’re launching it to meet the needs of our customers, and it really was designed to make their busy lives easier. We think that it offers a comprehensive suite of in-store and online benefits that help people save time and money across a variety of areas.”
Walmart is the largest grocer in the country. During the coronavirus pandemic, its sales have surged as customers have bought everything from milk and toilet paper to board games and bikes in its stores and on its website. Its e-commerce sales nearly doubled in the second quarter as customers sought out safe and easy ways to shop, such as shipping packages to their homes or retrieving purchases through curbside pickup.
How sustainable this growth will be remains to be seen. Walmart hasn’t provided a financial outlook for the rest of the year. Chief Financial Officer Brett Biggs told CNBC that some of the gains came from stimulus spending as customers had extra money in their pocket from the government — something that may or may not happen again.
On the earnings conference call, Walmart CEO Doug McMillon acknowledged the buzz around company’s soon-to-debut membership program. He and Marc Lore, who leads the company’s U.S. e-commerce division, were absent from a call with reporters to announce Walmart+’s rollout.
The company is juggling another significant business decision. It has teamed up with Microsoft to try to buy the U.S. operations of TikTok from Beijing-based ByteDance. The company has chosen a bidder and could announce a deal as soon as Tuesday, according to people familiar with the situation.
Unlimited grocery deliveries
Walmart+ members will get unlimited grocery deliveries to the home without a fee, so long as they spend at least $35. Other customers must pay $7.95 or $9.95 for each delivery, depending on the popularity of the time slot.
Walmart tested the concept with Delivery Unlimited, a flat-rate grocery delivery subscription service that cost the same amount. Subscribers of that program will automatically become Walmart+ members.
For curbside pickup and online packages, however, Walmart+ members and the rest of the retailer’s customers will have a similar experience. Fees and the speed of deliveries will look no different. Walmart+ members will not get preferential time slots for deliveries, Whiteside said.
Although Whiteside hinted at more perks in the future, she said the service’s benefits cut across its website and its stores to “make a really compelling offer.”
Walmart will now have to sell customers on the value of the service. It has launched and promoted similar programs and flashy initiatives before, only to pull the plug later. It launched, then scrapped its ShippingPass program, a two-day free shipping service that cost $49 a year. It debuted a text message concierge service Jetblack in New York City, but then shut it down earlier this year. It rolled out Scan & Go, a mobile app that it’s relaunching as part of Walmart+, at Walmart stores about two years ago only to end it a few months later. (The service is still available at subsidiary, Sam’s Club, where it originated.)
Still, Whiteside said Walmart has benefited from those programs.
“The reality is, we tested those, we learned a lot from them, and we’ve applied all of the learnings that we got from all of those programs and others to Walmart+ to make sure we bring a program to market that we believe meets the needs of our customers, that we can stand behind and that we know is robust enough and has the capacity to scale and be here for the long term,” she said.