After months of industry buzz, Walmart is set to launch a customer membership program that will compete with Amazon Prime.
Called Walmart+, the program will offer members unlimited free delivery from stores, fuel discounts and an array of shopping tools for $98 per year or $12.95 a month, Bentonville, Ark.-based Walmart said Tuesday.
Customers will be able to enroll in Walmart+ starting on Sept. 15. The company noted that about 2,700 of its more than 4,700 U.S. stores offer same-day delivery service. Sign-ups for Walmart+ include a 15-day free trial.
“We are a company committed to meeting our customers’ needs. Customers know they can trust us and depend on us, and we’ve designed this program as the ultimate life hack for them,” Walmart Chief Customer Officer Janey Whiteside said in a statement. “Walmart+ will bring together a comprehensive set of benefits where we see the greatest needs from our customers and where our scale can bring solutions at an unprecedented value.”
Walmart+ integrates Delivery Unlimited, a subscription-based, unlimited grocery delivery service that Walmart launched last fall. That program offered customers unlimited free deliveries on orders of $30 or more for an annual $98 fee or a monthly $12.95 fee. Delivery Unlimited subscribers will automatically become Walmart+ members, Walmart said.
Walmart noted that Walmart+ delivery service is available for more than 160,000 items — ranging from technology and toys to household essentials and groceries — and carries the same prices as in stores. The company said it will continue to offer delivery options with a per-delivery transaction fee, along with its current online order fulfillment options of free curbside pickup, NextDay delivery and two-day delivery.
Other initial benefits for Walmart+ members include Scan & Go touch-free payment, which enables users of the Walmart app to skip the checkout line by scanning items with their smartphone while shopping and then pay using Walmart Pay, as well as fuel discounts of up to 5 cents per gallon at nearly 2,000 Walmart, Murphy USA and Murphy Express fuel stations. Sam’s Club fuel stations also are slated to offer the Walmart+ discount.
An expanded menu of in-store and online Walmart+ benefits is upcoming, Walmart said.
“Life feels more complicated than ever. Walmart+ is designed to make it easier, giving customers an option to not have to sacrifice on cost or convenience,” Whiteside added. “We know shopping should fit customers’ needs, not the other way around. We have always been a champion for the right item at the right price, but now it’s more than that. We have the right shopping solutions at the right time, too.”
Though the membership program was expected across the industry, Walmart+ ties together Walmart’s omnichannel efforts with a strong brick-and-mortar store footprint that’s “increasingly competitive” versus Amazon, according to Jefferies analyst Christopher Mandeville. Last week, Amazon fired its latest salvo on the physical-store front with the debut of the Amazon Fresh grocery store in Woodland Hills, Calif., the first of at least six more locations confirmed by the e-tail giant, which also operates one Amazon Go Grocery store, over two dozen Amazon Go cashierless convenience stores and 487 U.S. Whole Foods Market stores.
“We believe this is the right time for Walmart to capitalize on accelerated e-commerce demand by leveraging its incumbency in grocery and superior omnichannel capabilities to make progress toward establishing a legitimate ecosystem that a potential TikTok deal could make whole,” Mandeville wrote in a research note on Tuesday. “Even without TikTok, we expect Walmart to expand the Walmart+ offering even further in the coming quarters, as we see plenty of opportunity to build out the company holistic value proposition against the likes of Amazon — and even Costco — by adding pharmacy (including delivery), two-hour Express Delivery and integrating Marketplace, which is now a good size after third-party adds.”
On the distribution side, Walmart’s store network provides a potential advantage over Amazon, particularly if Walmart can leverage its physical footprint as Marketplace third-party vendors come onto the platform, Mandeville explained. “While all of this may come at a cost to near- or intermediate-term earnings, we see this as the correct move if Walmart is to create a true ecosystem that’s able to compete with Amazon over the long term, especially as the online giant continues to push more and more into the physical world.”
Walmart+ also stands to turn up the heat on traditional supermarket operators. “For conventional grocers, we believe Walmart+ is a clear negative, given Walmart’s expanded assortment, omnichannel capabilities and superior value proposition,” said Mandeville.
The fuel discounts under Walmart+ will be a volume generator, he added. “We are not surprised to see discounts at Murphy USA included in Walmart+, as Walmart and Murphy USA already had a discount program in place via Walmart credit cards and gift cards, and the majority of Murphy USA stations are located in Walmart Supercenter parking lots. We believe the inclusion is a positive and will drive incremental volume to Murphy USA stations.”