Walmart Continues To Compete With Amazon With Free, Faster Shipping
In an effort to compete with Amazon’s Prime membership success, Walmart has announced it will be replacing a program that offered free shipping but had an annual fee with a program that has a lower free shipping threshold and faster delivery options.
The massive retailer said it will reduce shipping time to two days on two million of its most popular items. Such items include essentials like diapers and pet food as well as toys and electronics. With the previous program Walmart’s average shipping time was three to five days. Going on step further, starting Tuesday morning the company will also reduce the spending necessary for free shipping from $50 to $35.
The program, called ShippingPass, had already allowed members to buy more than a million items for free shipping at Walmart’s website. Last year, the retailer trimmed its shipping time frame from three days to two and cut the annual fee a dollar to make it $49.
The Bentonville, Arkansas-based Walmart reported that the service worked well, but they thought shoppers shouldn’t have to pay a membership fee for free shipping.
The shift in shipping programs is one of the first big moves made by new Walmart.com’s CEO Mark Lore, who joined the company last year when Walmart bought online retailer Jet.com. The strategy move truly highlights how Walmart is trying to figure out a way to compete with Amazon’s Prime plan.
Even with ShippingPass, Walmart is not quite there when it comes to offering the same things as their competitor. Amazon Prime memberships costs $99 a year, but that includes services like streaming music and videos. Analysts also suggest that Amazon Prime members buy more frequently and spend more money.
WFLA reached out to Lore, who declined to comment on Amazon, but did say lower prices, a wider assortment of eligible goods and faster shipping can build loyalty.
“Two-day, free shipping is table stakes,” he said in a conference call Monday to WFLA. “We’ve upped the ante. On a very fundamental level, we don’t have to charge for membership. We can save customers both time and money.”
While Walmart’s online sales have been slowing down over the past two years, Lore said he believed the new program will really increase those sales.
Purchases outside the 2 million “essentials” will count toward free shipping, but not faster delivery.
