Shoppers wear masks while shopping at a Walmart store in Bradford, Pennsylvania on July 20, 2020.
Brendan McDermid | Reuters
Walmart will launch its highly anticipated membership program on September 15 to build on the strength of its grocery store and customer demand for more convenient shopping.
The distinguishing feature of the subscription service, however, is that it is not included. It won't have the feature its rival Amazon Prime announces: free shipping on every item.
Walmart + members get unlimited free delivery, discounts of up to 5 cents per gallon of fuel, and access to a Scan and Go app that allows shoppers to skip the checkout. However, you must maintain a minimum of $ 35 for any online order to avoid fees, regardless of whether they are delivered to your home or dropped off at your door. It costs $ 98 per year or $ 12.95 per month.
Amazon Prime costs $ 119 per year or $ 12.99 per month and includes free two-day shipping and same-day shipping with no minimum order requirement. Food delivery through Amazon Fresh is free when customers reach a minimum of $ 35 and are in eligible territories. It also includes the ad-free music service and video streaming service with a large library of TV shows and films – including award-winning originals such as "The Marvelous Mrs. Maisel". Customers can also get some discounts at Whole Foods.
More share of wallet
Janey Whiteside, Walmart's chief customer officer, said the company aims to deepen the loyalty of those who already shop at its 4,700+ US stores and website.
"This is about really doubling up with the customers we have and getting more share of wallet and brains," she said on a call with reporters on Monday.
She said the program was not an answer to Amazon Prime or any other competitor.
"We're not launching Walmart + with the intention of competing with anything else," she said. "We're introducing it to meet our customers' needs, and it's really designed to make their busy lives easier. We believe it is a comprehensive suite of in-store and online benefits that people can use." Many areas can save time and money. "
Walmart is the largest grocer in the country. During the coronavirus pandemic, sales rose as customers bought everything from milk and toilet paper to board games and bikes in their stores and on their website. E-commerce sales nearly doubled in the second quarter as customers looked for safe and easy shopping options such as: After shipping packages to their homes or retrieving purchases from the roadside pickup.
How sustainable this growth will be remains to be seen. Walmart didn't provide a financial outlook for the rest of the year. Brett Biggs, Walmart's chief financial officer, told CNBC that some of the gains came from stimulus spending as customers had extra money in their pockets from the government – something that may or may not happen again.
On the earnings conference call, Walmart CEO Doug McMillon confirmed his enthusiasm for the company's upcoming membership program. He and Marc Lore, who heads the company's US e-commerce division, were absent on a call with reporters to announce the launch of Walmart +.
The company is juggling another important business decision. It has teamed up with Microsoft to try to buy TikTok's US operations from ByteDance in Beijing. The company has selected a bidder and could announce a deal as early as Tuesday, according to people familiar with the situation.
Unlimited grocery deliveries
Walmart + members get unlimited free home grocery deliveries as long as they spend $ 35 or more. Other customers will have to pay $ 7.95 or $ 9.95 for each delivery, depending on the popularity of the time slot.
Walmart tested the concept with Delivery Unlimited, a flat-rate subscription service for the delivery of groceries that costs the same amount. Subscribers to this program automatically become Walmart + members.
However, with roadside pickup and online parcels, Walmart + members and the retailer's rest of customers have similar experiences. Fees and delivery speed are no different. Walmart + members are not getting preferred time slots for deliveries, Whiteside said.
Although Whiteside pointed to other benefits in the future, she said the benefits of the service impact their website and businesses to "make a really compelling proposition".
Walmart must now sell customers about the value of the service. It has already launched and promoted similar programs and flashy initiatives to pull the plug later. It launched and then scrapped its ShippingPass program, a two-day free shipping service that was $ 49 a year. A SMS concierge service, JetBlack, was launched in New York City, but it was discontinued earlier this year. Scan & Go, a mobile app being relaunched as part of Walmart +, was rolled out in Walmart stores about two years ago, only to end a few months later. (The service is still available from the Sam & # 39; s Club subsidiary where it originated.)
Still, Whiteside said Walmart benefited from these programs.
"The reality is, we've tested these, we've learned a lot from them, and we've rolled over all of the lessons we learned from all of these and other programs to Walmart + to make sure we get a program to market that which we believe will be fulfilled. " The needs of our customers that we can stand behind and that we know are resilient enough and have the ability to scale and be here for the long term, ”she said.