Walmart Inc. is adding another perk to its fledgling membership program—in a sign that it’s investing more to boost subscriptions during the crucial holiday season.
Starting Friday, the world’s largest retailer is removing the $35 minimum on online orders for Walmart+ members to receive free next-day or two-day shipping for most items, the company said in a statement. However, grocery orders from stores will still require that amount as a minimum for free expedited delivery.
The retailer has invested heavily in its ecommerce operations and it’s paying off with online sales booming during the pandemic as shoppers cut back on store visits. The latest salvo in its battle with Amazon.com Inc. is Walmart+, a competitor to the online giant’s popular subscription service.
According to BMO Markets estimates, about 19 million households have enrolled in Walmart+. By comparison, Amazon has 126 million members in its Prime loyalty program in the United States as of September, according to a new estimate from Consumer Intelligence Research Partners (CIRP). Prime members account for roughly 65% of Amazon shoppers in the most recent quarter, according to CIRP.
CIRP based its findings on a survey of 500 U.S. consumers who made a purchase on Amazon.com between July and September. Amazon does not disclose how many Prime members it has by country; however, in January, it said it had more than 150 million Prime members globally.
Free shipping can also make shoppers more likely to purchase, according to a Digital Commerce 360 holiday retailer survey conducted July-September of 118 respondents. Retailers said they’re seeing shoppers buying when unconditional free shipping is made available at a rate of 3.83 on a scale of 1-5. Retailers also agreed (3.48) that shoppers are buying when conditional free shipping is offered, such as a minimum order threshold.
“Walmart’s program is naturally being compared to Prime, but the brand is able to leverage a level of familiarity that Amazon can’t offer,” says Harris Diamand, vice president of customer experience at product content provider 1WorldSync. “Almost everyone lives a short drive away from a Walmart store, meaning most Americans have set foot in a store at some point in their lives. While older demographics haven’t been too keen with online grocery shopping, the pandemic has forced many adults to explore online options for the first time. Since they have familiarity and comfortability with the Walmart experience, they’re more likely to test Walmart’s delivery or curbside pickups options, as they already know what type of product quality to expect. Now that Walmart+ has dropped the $35 cart minimum, this will likely attract more enrollees that want to buy single products instead of weekly groceries.”
Walmart+ costs $12.95 per month or $98 for a year. Members save five cents per gallon on fuel at Walmart and can get member prices at Sam’s Club fuel centers. Other benefits include Scan & Go and free unlimited deliveries. So far, Walmart has provided few details on the performance of its membership program since its debut in September.
In its fiscal third quarter earnings call transcript from Seeking Alpha, CEO Doug McMillon said Walmart is “excited about the results” for Walmart+, but it was too early to share details. “It’s really early on. We just launched this in the middle to the late—latter part of Q3, so we don’t have anything yet. We’re still learning. We’re excited about the offer. We know customers are excited about the offer,” he said.
McMillon also said the benefits now available to Walmart+ members are just a start but did not provide details about the kinds of services Walmart might add to the program. “Over time, we’ll evaluate the program against our broader set of assets with the aim of improving the value proposition and deepening our relationship with customers, including earning a greater share of wallet,” McMillon said.
In a Digital Commerce 360 survey of 604 frequent online shoppers conducted in mid-September, 48% of consumers said they were somewhat or very likely to join Walmart+. Even 43% of Amazon Prime members say they are intrigued by Walmart’s offer. Overall, 41.1% of those surveyed said they were very (14.9%) or somewhat (26.2%) likely to join Walmart+. But the interest was higher among avid web shoppers: 47.7% of consumers who shop online at least once a week said they are very (19.2%) or somewhat (28.5%) likely to sign up for Walmart+.
A recent survey of more than 20,000 U.S. consumers from online research platform Pipslay found 11% of Americans subscribed to Walmart+ within two weeks of its launch.
Walmart is No. 3 in the 2020 Digital Commerce 360 Top 1000. Amazon is No. 1.
James Melton and Fareeha Ali contributed to this report.Favorite