Walmart gears up for unlimited shipping service for online shoppers, says report

The Associated Press reported today indicated that retail bellwether Walmart is getting ready to roll out an unlimited shipping service for online shoppers this summer, which will be priced lower than Amazon’s “Prime” service, which sells for $99 per year.

Walmart’s service, said the AP, would be basically half the price of Prime at $50 per year, with products delivered in three days or less, with the service to initially be available to customers by invitation only.  The report added that this program demonstrates the commitment Walmart has to expanding its online business, with a company spokesman explaining it is in response to customer demand for those looking for predictable and affordable shipping, well as a part of an overall strategy to test new ways to serve customers shopping online.

Parcel experts told LM that with Walmart getting into the online delivery space, there remain some differences between this offering and Amazon Prime.

“This is interesting but not surprising,” said Rob Martinez, president & CEO, Shipware Systems Corp, a San Diego-based parcel consultancy. “What is surprising is how long it took Walmart to come up with a competitive offering. However, if I were Amazon, I would argue my competitor’s program offered half the value as well. Prime has a lot more value than just free, unlimited shipping. It also includes movie rentals, streaming music service, digital storage, etc.”

As for the main differences between Prime and the Walmart offering, Prime benefits include free, unlimited 2-day shipping, and Prime now offers 2-hour delivery in several major metropolitan markets. It also offers Saturday and Sunday delivery, whereas Walmart’s is a 3-day delivery service.

Martinez said this is a function of fulfillment center density, as Amazon has close to 70 fulfillment centers in North America, compared to only 5 for Walmart. 

“The ability to fulfill orders closer to the final customer is a major advantage for Amazon,” he said. “Moreover, Amazon’s free shipping is offered on more than 22 million items, versus a little more than 1 million items for Walmart. What we find most interesting is the ongoing blurring of retail and e-commerce, and the success of online fee-based membership-based programs (like Amazon, Costco, Target and others) for customer acquisition and retention, buying frequency, and ultimately revenue share.”

Jerry Hempstead, president of Hempstead Consulting in Orlando, said that there is presently a vastly different selection of items at Amazon versus Walmart, as just about everything in a Wal-Mart can be shopped on Amazon, but the reverse is not true.

“I really don’t see this as a shot at Amazon by Wal-Mart but just an expansion of the options they now offer,” he said. “For this to be of benefit to the consumer they must consider that they have to make about five online purchases per year from Wal-Mart for this to be of real value. The story is different at Amazon. Amazon does not have a local retail presence within five miles of the consumer, where the buyer can get gratified. One must pay for shipping with Amazon, either per shipment or by being a Prime member. 

What’s more, he explained that with a local Walmart, purchase gratification is immediate, while with Amazon it is a day or two.

“With Walmart’s offering they are saying three days (or less) which is not as predictable as Amazons push to shorten the delivery time to one day,” he said. “With Walmart you have a choice, with Amazon you don’t. And if Walmart does not have an item in the store, they will ship it to the store for free for you to pick it up. This is not presently a ubiquitous Amazon offering.”

As previously reported, the impact of e-commerce on shipping and consumer shopping habits cannot be understated.

“It is no surprise the biggest driver of change in our industry is e-commerce; it is bringing unparalleled and unprecedented growth and a landscape of continuing change,” said Henry Maier, President and CEO of FedEx Ground at last month’s NASSTRAC conference.

Maier noted that e-commerce can now be viewed as a revolutionary shift in our society, akin to how airplanes were decades ago. And he explained how in the United States alone, in 2015, e-commerce will top $300 billion in sales and is fast outpacing brick and mortar store rollouts, which, from 2012-2014, increased by more than 100 percent, whereas during that same period the number of “Web,” or e-commerce-type stores shot up by 1,354 percent.