On October 25, Amazon
The retailer sent out an email on that date that read, “You may have heard that starting today, one grocery delivery service will start charging its customers $9.95 for every single delivery… That’s why, today only, Walmart is announcing that new customers who sign up for Walmart+
Close-up of sign advertising Amazon Prime grocery pickup at Whole Foods Market grocery store in San … [+]
“It’s a clever campaign for Walmart that will sway some new subscribers — ones who shop both brands and potentially a few net-new who want to lock-in for free delivery,” wrote BrainTrust member Patricia Vekich Waldron, CEO of Vision First, in an online discussion about the matter on RetailWire last week.
Consumers who signed up on October 25 for Walmart+ by 11:59 p.m. PT were eligible to receive the $9.95 back. Walmart’s annual grocery delivery subscription program costs $98 a year. It includes free grocery delivery from local stores at the same prices as customers pay in-store. It also includes free shipping without a minimum purchase, discounts on fuel and prescription medicines. Members are also being given early access to Walmart’s three “Black Friday Deals for Days” events throughout November. Walmart’s cash-back deal was part of the free 15-day trial Walmart offers for customers considering a Walmart+ subscription.
Walmart is looking to give consumers who shop online at both Amazon and its site a reason to give its subscription service a try. The company is also looking to pick off some of the consumers who shop its rival’s site but not walmart.com. A recent Jungle Scout report found that 35 percent of U.S. consumers shop on Amazon, but not Walmart. Only nine percent shop on Walmart’s site but not Amazon’s.
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“This move may not put a dent into Amazon’s bottom line but it may entice the Whole Foods customer to give Walmart a go,” wrote Liza Amlani, principal and founder at Retail Strategy Group. “The challenge will be for Walmart to keep these customers because loyal Whole Foods customer will simply switch from online to offline.”
Others experts on the RetailWire BrainTrust were less bullish about Walmart’s chances of converting customers with this move.
“As much as this is an amusing campaign, in online grocery the customer and demographic overlap between Walmart and Whole Foods is minimal,” wrote Neil Saunders, managing director at GlobalData. “Walmart is sensible to emphasize the value of its delivery service, but I doubt it will pick up a tremendous number of customers from this campaign.”
“Good PR from Walmart as it is a shot at Amazon and shows people that they are doing this,” wrote Andrew Blatherwick, chairman emeritus at Relex Solutions. “But as a winning formula for new customers, it’s not a big deal.”
“The ‘Whole’ demographic may not like the move but they won’t be shopping for produce at Walmart,” wrote Ken Morris, managing partner at Cambridge Retail Advisors. “I guess another way to interpret Walmart’s move is this: Walmart actually has to pay its customers to sign up for its food delivery. That might be their way of compensating customers for getting zero streaming content from their subscription service.”
Amazon-exclusive shoppers are more sensitive to delivery fee charges than even Walmart’s customers, according to the report. Seventy-six percent of shoppers who are “Amazon-exclusive” say they want products with the lowest shipping price when they shop online. Sixty-four percent of Walmart-exclusive shoppers feel the same way.
One BrainTrust member, though, noted that Walmart still has a physical advantage.
“Personally, I think Walmart ‘won’ the pandemic, period,” wrote Paula Rosenblum, managing partner at RSR Research. “Amazon is trying to gain Walmart customers (with a special Prime plan) but I think Amazon’s pandemic behavior and out-of-stocks will not serve it well for some time to come. You just can’t beat those ‘store things’ for stocking product. Even if you have your own planes (snort).”
