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Walmart waited a decade to introduce a membership shipping service to compete against Amazon’s hugely successful Prime program. Less than two years later, it’s killing off the new service and changing tactics.
The big-box retailer said Tuesday it got rid of ShippingPass, which offered unlimited two-day shipments on Walmart.com for $49 annually. In its place, Walmart cut the minimum for free shipping and sped up those deliveries.
You can now get free shipping for orders of at least $35, down from $50, and get your items in two days, down from four to seven days for standard shipping. (The change rolls out at 8 a.m. ET Tuesday.) That’s an improvement from Amazon’s offer for non-Prime members, with free shipping kicking in at $49 and orders taking five to eight days to arrive.
“At this day and age, two-day shipping is table stakes, so we don’t think we should charge membership for it,” Marc Lore, Walmart’s new US head of e-commerce, told reporters ahead of the announcement.
Lore’s comment might be seen as a dig at Amazon, which charges $99 annually for Prime and the service’s most popular benefit of unlimited, two-day shipping. Yet, the move also shows how much Amazon and Prime have changed the world of commerce, forcing Walmart — the world’s biggest retailer by revenue — to finally give in to two-day shipping as a default. Others retailers may follow suit to keep up.
While plenty of US retailers offer free shipping at a minimum amount, there aren’t all that many that offer free two-day deliveries. For instance, Best Buy does for thousands of items, at a $35 minimum, while Under Armour does for orders over $175. Many others provide free three- to five-day shipping, or slower, instead. E-commerce site Jet.com, which Walmart acquired last year, offers free shipping at $35, but deliveries take two to five days.
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Walmart’s two-day service appears to be targeted at online shoppers that have yet to join Prime. An estimated 44 percent of US households subscribe to Prime, making them far more likely to shop regularly with Amazon. Instead of going after those loyal Amazon customers with a rival membership program, Walmart is now trying to gain a stronger following with the other 56 percent and steal away a few non-Prime Amazon customers along the way.
There are still big differences between Walmart and Amazon’s offers. First, Amazon’s Prime offers two-day shipping without order minimums. Also Prime has a lot more benefits, including music and video libraries. And, Amazon’s selection is still far greater than the over 2 million items Walmart is offering for its two-day shipping. All those differences have contributed to Amazon becoming the leading e-retailer in the US, while Walmart.com is a distant second place, according to Euromonitor.
Walmart’s latest move, though, highlights its newly aggressive stance to try fighting Amazon and grow online, especially after it bought Jet, which Lore founded, for $3.3 billion last year.
For two-day shipping through Walmart, orders need to be made by 2 p.m. your time. After then, the delivery will come in three days instead. In addition to the new shipping service to homes and Walmart stores, the company will still offer same-day in-store pickup on certain items and online grocery pickup — with plans to expand that service this year.
Lore declined to say how many ShippingPass members Walmart had, adding that they will get refunds. The company also stressed the point that ShippingPass was a pilot program that was continually tweaked. The new two-day shipping for everyone was the next natural step and more “customer-centric,” the company said.
Let’s see: refusing to disclose membership numbers, introducing then scrapping programs, and saying things like “customer-centric.” Yep, Walmart is at least sounding a lot more like Amazon already.
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