Both Amazon and Walmart craft strategic initiatives to bring more customers into each merchant’s ecosystem. Just as Apple integrates an array of products and services that create sticky relationships with its users, the mega-retailers command an empire of offerings that enable cross-selling opportunities that drive sales growth.
Membership and/or subscription services have been on the rise as consumers perceive value by paying one price for a bundle of services. Prime has become a magnet for customers that have access to Amazon both in-store and online. Walmart+ has the scale and deep pockets to develop and sustain its own membership version.
It took Amazon Prime 15 years after its launch to get to where it is today. Expect a Walmart+ program to have a long runway to determine its level of adoption by consumers.
A Recode article discusses more on this topic, which is excerpted below:
When Amazon launched a funky membership program called Amazon Prime in 2005, Walmart boasted larger profits than Amazon had revenue. Fifteen years later, though, Prime is the key reason for Amazon’s dominance over Walmart in online sales.
That pressure has pushed the traditional retailer to burn tens of billions of dollars to fight back while its executives have cycled through various stages of reaction to Prime’s ascent: denial, followed by meek competition, followed by a reversal that seemed to signal Walmart wanted to stick to a free, no-membership strategy.
But Recode has learned that over the past 18 months, the world’s largest brick-and-mortar retailer has explored creating its own paid membership program that would include perks that Amazon can’t replicate, in part to avoid a direct comparison to Prime. Amazon now accounts for nearly 40 percent of all online retail sales in the US, according to eMarketer, and Prime is a huge reason why. Walmart is a distant No. 2 with only a little more than 5 percent of the US e-commerce market.
As soon as next month, Walmart plans to start publicly testing a membership program called Walmart+, according to sources. The program is expected to essentially launch as a rebrand of Walmart’s existing Delivery Unlimited service, which charges customers $98 a year for unlimited, same-day delivery of fresh groceries from one of the 1,600-plus Walmart stores in the US where the program is available.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group