(Bloomberg)—Walmart Inc.’s new subscription program wants to entice customers with benefits like cheap gas and no checkout lines. But it turns out many members aren’t using them much.
About three out of four users don’t take advantage of perks such as less-expensive fuel and Scan & Go technology that allows store shoppers to pay for items on their phone, according to a survey this month of 264 Walmart+ members by industry researcher Field Agent. The main appeal of the $98-a-year program is unlimited free deliveries, the survey found.
The most common reason respondents gave for not using the other benefits? They simply weren’t aware of them.
The results provide a rare glimpse into a business that Walmart has refused to say much about since launching it in September. Analysts’ estimates of its size have ranged from about 7.4 million members to as many as 10 million. Morgan Stanley’s Simeon Gutman said in a recent note that most consumers just perceive it as a same-day grocery service.
A Walmart representative declined to comment.
Based on their experience so far, 77% of Walmart+ members surveyed plan to renew their membership, Field Agent found. That’s below the 93% first-year renewal rate of Amazon.com Inc.’s Prime service, according to estimates by Consumer Intelligence Research Partners. Almost nine out of 10 Walmart+ members surveyed by Field Agent are also Prime members.
Walmart has said it will roll out more perks, but so far its biggest move was to eliminate the $35 minimum to get free shipping on non-food orders.
“We’re seeing shoppers primarily respond to the membership’s delivery benefits, which is to be expected as people shop from home during the pandemic,” said Henry Ho, Field Agent’s co-founder and chief strategy officer.
Subscription programs have become increasingly popular among retailers, as they deliver consistent revenue and typically encourage members to spend more with the retailer over time, in order to maximize the benefits. Best Buy Co., for one, is testing a $200-a-year program called Best Buy Beta that offers unlimited tech support, free installations and exclusive pricing.
“The winning model in retail is usually one that creates lifetime value,” Gutman said in a note. “Membership is arguably becoming essential to ‘owning’ the customer.”
Walmart is No. 3 in the 2020 Digital Commerce 360 Top 1000Favorite