Editor’s Note: The retail wars heat up
Walmart is turning up the heat on Amazon — and offering the entire mass retail community a potential path to better compete with the Internet giant.
The big question is whether it is enough to level the playing field with Amazon.
The giant chain announced in late August that it was rolling out a much-anticipated membership service that will give its shoppers free shipping on many of its products carried at Walmart.com. The service, called Walmart+, will cost $98 a year, about $20 lower than what Amazon charges for its Amazon Prime service.
In order to get free shipping, consumers must purchase at least $35 in merchandise from Walmart+, while Amazon Prime, which also offers its much-ballyhooed online entertainment, does not have a minimum for free shipping. According to published reports, Walmart said that about 160,000 items would qualify for free shipping.
This is a no-brainer for Walmart, and the gurus on Wall Street agreed, driving up the price of the company’s stock by about $9 per share on the day the new service was announced. While company officials seem to be going out of their way to avoid stating that Walmart+ is designed to fight off Amazon, there is little doubt that the new service is a vehicle created to win back shoppers from the online merchant. The bottom line is that if any retailer can develop and successfully run something on the scale of Amazon Prime, it is Walmart.
But, frankly, while a great start, I do not think it is enough. First, shipping needs to be free for all purchases. Second, Walmart will have to expand its offering to virtually all products in its distribution system. Third, and most importantly, Walmart officials are going to have to put on their thinking caps and find more ways to show consumers that their service is better than the other guy’s service.
Still, this is a giant step in the right direction. Walmart has the resources to compete head-on with Amazon. Other traditional retailers, with less backing, will have to look for their own avenues to convince consumers that Amazon is not the answer for all of their shopping needs.
Is that possible? Of course, but it will take a lot of ingenuity, patience and perseverance to win this battle. Amazon has a gigantic head start. Now, it is time to play a little catch-up.