Back in February, Walmart said it would launch a competitor to Amazon's Prime membership program. Delayed by Covid-19, Walmart now says it's coming this month. As my Inc. colleague, Bill Murphy Jr. writes, it could signal the start of a war between the retail giants. I'm more inclined to think it's likely to result in Walmart realizing something that seems obvious to me: This is a terrible idea.
We'll get to that in a moment.
The details still aren't entirely clear as far as what benefits members can expect, but Recode is reporting that Walmart+ will include same-day delivery of groceries and other merchandise, along with discounts on fuel and exclusive product deals, for a $98 annual membership fee.
That's quite different from what Amazon Prime offers with next-day delivery of over a million products, streaming videos and music, and Prime Day, Amazon's annual members-only discount sale. And, with 150 million Prime subscribers, Walmart is facing an uphill battle, especially considering Amazon's online retail business is significantly larger than Walmart's. The same is true for its market value, with Amazon recently hitting its all-time high stock price.
Also, Amazon hasn't exactly been knocking it out of the park lately. Customers have complained that limited availability and extended delivery times make Amazon Prime far less of a value at a time when people are relying on online shopping more than ever for even the basics.
Amazon has also twice pushed Prime Day back further in the fall, now saying only that it will likely happen the week of October 15. That delay creates an opening that Walmart, the world's largest brick-and-mortar retailer, is ready to capitalize on.
Walmart's e-commerce business has grown quickly, especially during the pandemic. Just last month, the company announced a partnership with Shopify to allow 1,200 retailers to offer their products on Walmart's online marketplace. Now, the company is rolling out Walmart+.
The biggest question for Walmart is whether its customers, many of whom already pay $119 a year for Amazon Prime, will pay another $98 for one more subscription service. Walmart is apparently also planning to add some streaming video service, but is another streaming option the thing Walmart thinks the world really needs right now? Has anyone asked how Quibi is doing lately?
You don't have to answer that.
Here's the thing, and I think this is an important point for every business: Walmart isn't going to beat Amazon at its own game. First of all, subscription memberships are a premium service. Walmart isn't a premium brand. In fact, Walmart built a retail empire on the "low prices every day" mantra. Its customers expect low prices by default, which doesn't really lend itself to paying an additional membership fee.
I guess it's possible customers may be willing to pay for the added convenience Walmart can offer, but trying to be better at someone else's strategy isn't a long-term strategy.
Look, the entire reason Amazon launched Prime in the first place was to make it easier for customers to shop online, instead of at stores like Walmart. It was a completely different approach, and it was extremely successful. The real question is whether Walmart is going to be able to return the favor.
This isn't the first time a big company has tried to copy the strategy it sees work for one of its competitors. Maybe Walmart should ask Microsoft how its retail experiment modeled after Apple's stores worked out (hint: it didn't). In fact, it never really works out trying to be something other than the brand your customers have come to trust and expect.