September 2, 2020

Walmart reveals online subscription service to challenge Amazon

By Robert Scammell

Retail giant Walmart will launch an online subscription service to challenge ecommerce behemoth Amazon on 15 September.

Known as Walmart+, the subscription package will cost $98 annually or $12.95 per month for unlimited free delivery – including up to same-day delivery – on 160,000 items. It will also provide discounts on some items, such as fuel. Walmart is offering a 15-day free trial period in the hope of winning over customers in the highly competitive ecommerce space.

The push into ecommerce subscriptions comes at a key time for Walmart. The world’s largest retailer by revenue has seen online sales soar by 74% during the pandemic as stay at home restrictions drove up demand for home deliveries. The new service replaces Walmart’s previous foray into a subscription service, ‘Delivery Unlimited’.

However, the $418bn-valued company trials behind the $1.75tn Amazon for online sales in the US. According to research company eMarketer, Walmart is forecast to secure 6% of the ecommerce market this year compared to Amazon’s 38%.

Since its launch in 2005, Amazon Prime has gained more than 150 million members globally. Walmart+ comes at a marginally lower price point than Prime, which charges $119 per year or $12.99 per month. However, Prime subscriptions also provide access to its video streaming service, in addition to discounts and free next-day delivery.

“Life feels more complicated than ever. Walmart+ is designed to make it easier — giving customers an option not to have to sacrifice on cost or convenience,” said Walmart chief customer officer Janey Whiteside in a statement.

“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.”

The TikTok factor

The launch of Walmart+ could coincide with a joint bid with Microsoft to acquire video-sharing app TikTok. Chinese parent company ByteDance has been forced to find a buyer for its US operations by President Donald Trump, who has cited national security concerns. TikTok has denied these allegations and is suing the Trump administration.

It remains unclear whether TikTok will go ahead with selling its US business, but if Walmart and Microsoft are successful in their acquisition it could provide the retailer with a trove of consumer data. This could give it a boost against the data-rich Amazon, as well as provide a marketing channel for Walmart.

Read more: 5G latency has a new champion in Walmart


Verdict deals analysis methodology

This analysis considers only announced and completed cloud-deals deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.

GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.

More in-depth reports and analysis on all reported deals are available for subscribers to GlobalData’s deals database.

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