The Business Update with Vivian Benishek
Wednesday, July 8, 2020
Seeing Double? Introducing Walmart+, an Amazon Prime-like Subscription Service
The great Irish poet Oscar Wilde once stated that “imitation is the sincerest form of flattery.” Amidst the chaos of COVID-19 and rise of protests against racial injustice, this wise saying rings true in our current retail industry like never before. Now, Walmart and Amazon Prime will be butting heads. In order to understand the battle between these two retailers, you have to go back to their origins. Amazon Prime was born a funky and unfamiliar concept exactly fifteen years ago in February of 2005. Since then, it has completely revolutionized the landscape of traditional retail and devastated small businesses with the crush of its mighty fist. For years Walmart has struggled to keep up with Amazon’s dominance in e-commerce, which accounts for nearly 40 percent of all online sales in the United States according to eMarketer. Walmart, on the other hand, only made up 5 percent. And the numbers never lie. As reported by Vox’s Recode, Amazon is valued at $1.5 trillion, while Walmart stands at $337 billion. With nearly half of Walmart’s top-spending families having Amazon Prime memberships, Walmart was forced to implement strategies to lure in new clients and satisfy the current ones, always enticing them to never splurge their money elsewhere. Now, in times of a tense economy and the rampant spread of disease, both of these multinational big-box giants may be on the verge of entering a heated competition regarding their subscription services. In other words, a riveting retail competition is on the horizon.
Later this July, Walmart plans to roll out a new subscription service called Walmart Plus, with a price tag of $98 a year. Similar to those of its main competitors, Recode shared how the plan’s perks include “same-day delivery of groceries and general merchandise, discounts on fuel at Walmart gas stations, and early access to product deals.” How does this compare to its biggest competitor? Amazon Prime is currently $119. However, there are many opportunities to earn a significant discount and this membership gives clients flexibility that allows them to pay monthly instead of yearly. Their loyalty program includes express delivery, streaming of movies, book and television shows, unlimited reading and Whole Foods discounts.
There was also a sudden jump in Walmart Inc stock due to their big announcement. On Tuesday, July 7, CNBC reported that their shares rose by nearly 7% to close at $126.95. It’s important to keep in mind that Walmart+ was originally planned to come out in March or April, but COVID-19 postponed its launch. Throughout the pandemic, Walmart has reinforced how one of its advantages over its competitors is its massive online grocery sales and, according to CBS News, “the company in May reported a whopping 74% jump in e-commerce sales for its latest quarter.” Now, the company has to stay on its toes and ensure they reach their fullest potential.
Will Walmart+ be enough to disrupt Amazon Prime’s massive success? Will customers make the switch to a cheaper, newer subscription? Is there room for two powerhouses? Although there are still several unknowns about the new membership, it is evident Walmart+ is nothing short of a necessary move, one that is a daunting and direct response to Bezos’ ever-growing tech empire. In the end, who will come out on top in this retail rivalry? My friends, only time will tell.
That’s it for this briefing. See you next time!
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