Wal-Mart Takes On Amazon with New, Unlimited Shipping Subscription Service

Two of the world’s largest retailers will square off soon as Wal-Mart tests a new subscription service for unlimited three-day shipping. If Wal-Mart’s experiment

Two of the world’s largest retailers will square off soon as Wal-Mart tests a new subscription service for unlimited three-day shipping. If Wal-Mart’s experiment is successful, its unlimited shipping service will compete directly with Amazon Prime.Wal-Mart will test its new unlimited shipping service this summer for $50/year, about half what Amazon Prime charges. Subscribers will get their online purchases delivered at no additional cost within three days, according to Fortune. Initially, the service will be available by invitation only, and unlimited shipping will only include about 1 million of Wal-Mart’s 8 million online items. In its 2015 annual report, Wal-Mart reported global e-commerce revenue of $12.2 billion.This new subscription service is consistent with Wal-Mart’s focus on four priorities, as explained in its annual report: a global technology platform, a next generation fulfillment network, talent, and the integration of digital and physical retail.”Our new, highly automated fulfillment centers allow more orders to be shipped faster, and at a lower cost, to customer’s doorsteps. We’re attracting many of the industry’s top engineers and scientists as we build a technology company inside the world’s largest retailer,” said the report.The key differences between Wal-Mart’s service and Amazon Prime are price and the fact that Wal-Mart’s service will not include prime instant video, unlimited ad-free streaming music, digital books, or unlimited photo storage, which Amazon offers.Insider Take:Successful companies have always had to adapt to meet or beat their competition to survive in terms of price, quality, product features, etc. Wal-Mart’s venture into the subscription marketplace is just one example of a company trying to differentiate itself from the competition. In this case, they are doing so by beating Amazon’s price by nearly $50, but they are really just playing catch up. Amazon has dominated the market for a long time, and leads the marketplace in all four of Wal-Mart’s priorities. It won’t be easy for Wal-Mart to compete.Whether or not the company is successful will depend on user experience and the service itself. Wal-Mart will need to meet or exceed its customers’ expectations, and it must figure out a way to convert the occasional online shopper into a paying subscriber and a regular shopper who does most of their shopping online at Wal-Mart.To garner attention, Wal-Mart will need a multi-faceted, multi-media marketing and promotional campaign. It should also consider whether or not free shipping will be enough to satisfy subscribers. Sure, Amazon Prime costs twice as much but it comes with so many other services that Wal-Mart is not in a position to offer. Wal-Mart needs to listen to its customers and adapt quickly to meet their needs. Even in ideal conditions, Amazon will be a fierce competitor. We’ll be watching eagerly to see what happens next. Stay tuned for updates! 

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