It’s official. Walmart has announced its own online marketplace membership program, Walmart+, set to launch September 15. The program, which is designed to compete with Amazon Prime, offers members benefits like free, one-day shipping.
This has been in the works for some time. Amazon has been the leading online marketplace for years, and Walmart has been pivoting its business to become a more threatening competitor.
What’s different about Walmart+?
Similar to Amazon Prime, Walmart+ is a paid membership that offers subscribers benefits including free, one-day delivery, an in-store contactless buying system called Scan & Go (which appears to rival Amazon Go), and discounts on gasoline. Walmart will utilize its 4,700 brick-and-mortar locations to power the service, claiming to make shopping “faster for families,” and plans to add more benefits down the road. Shoppers can get a 15-day free trial of Walmart+ before committing to the service.
At $98, it’s cheaper than Amazon Prime, but it isn’t offering as much. Amazon Prime offers more than marketplace perks — video streaming, music, Audible credits, Twitch Prime, and a host of other benefits and digital services. Those digital offerings add appeal for consumers that value an all-in-one stop.
However, Walmart+ has a lot of potential in terms of distribution. Walmart has existed as the US’s leading brick-and-mortar retailer for decades. You’d be hard-pressed to find a neighborhood in the states that isn’t near a Walmart location, which gives the retailer significant capacity and delivery coverage.
Still, real estate doesn’t necessarily translate into infrastructure. Brick-and-mortar is different from e-commerce. Walmart will need to further pivot its processes and capabilities to support a fully-adopted online marketplace.
Back in February, Walmart announced the official launch of Walmart Fulfillment Services (WFS), which opened its online marketplace to third-party sellers. Then in April, the company announced a partnership and integration with Shopify, which is expected to bring 1,200 Shopify sellers to Walmart’s marketplace by the end of 2020. Most recently, in July, the company cut corporate jobs in its store planning, logistics, and real estate units, according to Bloomberg. All of these moves signal that Walmart is pivoting to become a more e-commerce focused business.
Do consumers have enough room for two online marketplace memberships?
Consider this: In 2019, it was estimated that 82% of American households have an Amazon Prime membership. That number has likely grown since the outbreak of COVID-19, which caused consumers to flood online marketplaces in unprecedented numbers. Many of those consumers probably won’t pay to have both Walmart+ and Amazon Prime. In order to get ahead, Walmart is going to need to convert a good amount of Amazon’s current members. That might be hard considering the familiarity most consumers have with Amazon.
Consumers are confident they can find what they’re looking for on Amazon. With over 2.2 million active sellers, Amazon has a seemingly endless amount of brands on its platform. If a consumer has a specific product in mind, they can most likely buy it on Amazon.
That breadth allows them to cast an extremely wide net as far as shoppers go. In order to become a more direct competitor, Walmart is going to need to increase its inventory selection — something that the company is working very hard at.
In July, Walmart surpassed 50,000 sellers, nearly doubling its seller count year-over-year. That growth is still overshadowed by the titanic size of Amazon, but it’s impressive nonetheless. Walmart is in its infancy as an online marketplace, and there’s a long road ahead before they’re in the same league as Amazon.
Should my brand be on Walmart+?
Brands need to be where their customers are. Walmart+ is brand new, and Walmart.com is still in its infancy compared to Amazon. As these digital marketplaces grow, brands will need to evaluate whether their customers are also Walmart.com and Walmart+ customers — and if they are, make the necessary steps to meet them there.