Walmart is gearing up to test a shipping service to compete with Amazon Prime, Reuters reports. Walmart’s service will cost $50 per year for unlimited shipping, half the yearly price of Amazon’s $99 Prime subscription. But Prime is not just an expedient shipping option: Amazon stuffs Prime with multimedia goodies and deals to retain customers, and it has found that Prime members spend almost twice as much money on Amazon than non-Prime shoppers. Incentivizing customer loyalty pays dividends in customer retention, and Walmart wants in on it.
Walmart’s shipping service, which Reuters says will launch as a trial this summer, is the next step in a painful growth process that started a few years ago with Walmart overhauling its e-commerce system, reports The Information. Raising e-commerce income is an obvious goal, but so is staying relevant: As Amazon deploys one-hour shipping in major cities and continues to develop its drone delivery system, anyone wishing to compete with the e-commerce titan should gear up now or be swept away like Borders. Google got into the Prime competition game last October with the release of its $95 per year Google Express service.
Even more traditional retailers are taking a page from Amazon: Makeup giant Sephora just launched an Amazon Prime-like membership service, called Flash, which offers free two-day shipping for an annual enrollment fee of $10. During its pilot program, Flash subscribers spent twice as much as non-subscribers.
When I checked out Walmart’s online ordering (admittedly my first time ever visiting Walmart’s website), surfing around was smooth–the overhaul seems to have been effective. The interface is clean and there’s a very useful sidebar on the left where I can select from lots of criteria (like price range, customer reviews, screen size, and even how many USB ports I want) to narrow my search results. But most importantly, the browsing experience is fast. Sure, it’s not quite at Amazon’s level of speed, search options, and product range, but Walmart’s e-commerce portal is better than I expected.
Of course, my low expectations stem from Walmart’s strategy of undercutting competition and profiting off razor-thin product margins–a strategy which includes keeping its workers’ wages so low that American taxpayers paid $6.5 billion in public assistance in 2013 to Walmart employees. But razor-thin margins, and even selling at a loss, is Amazon’s strategy, too, and there’s something to be said about the old-school undercutter learning new tricks from its 21st-century competition. (And to be fair, Amazon has its own reputation for bad working conditions and terrible pay for its lowest-wage workers–read Mother Jones‘s exposé here.)
Walmart’s shipping service, code-named “Tahoe,” will be invite-only and ship a limited selection of its online catalog in three days or less. If Walmart wants to punch at Amazon’s weight class, it also needs to compete with Amazon’s range of products. It remains to be seen whether Walmart’s 7 million-plus online product catalog is enough to satisfy customers who are used to Amazon’s near-endless inventory.