Walmart+ drops free shipping minimum
Published Dec. 2, 2020
In a move that positions it more directly against Amazon, Walmart is doing away with the $35 shipping minimum for its Walmart+ members, effective Friday. Delivery from Walmart stores on items like groceries still carries a $35 minimum, according to a company blog post.
That means Walmart+ members, who pay $98 a year or $12.95 a month after a 15-day free trial period, "will receive free next-day and two-day shipping on items shipped by Walmart no matter the basket total," per the post.
Walmart also said it's expanding fuel discount opportunities for Walmart+ members, giving them Sam's Club member pricing at the warehouse retailer's fuel stations, along with the more than 2,000 Walmart, Murphy USA and Murphy Express stations already part of the membership.
Walmart+ may have been developed, as many analysts believe, more as a way to protect its bottom line than to compete head to head with Amazon. But it's probably difficult to operate any membership program involving free fulfillment outside the specter of the e-commerce giant's Prime program.
Dropping the minimum order requirement in this way broadens Walmart+'s value proposition "significantly," according to Keith Anderson, vice president of strategy and insights at Profitero.
"This is more directly competitive w/ Prime," he said by email, noting that he had previously compared Walmart+ to Instacart Express, more than Prime. "On a unit economic basis, Walmart may be ready to drop the minimum now due to economies of scale. And it's strategically timed — this removes a little friction during the peak holiday shopping window. Hope they're ready to absorb & fulfill any additional demand."
Early research from Piplsay shows that Walmart's membership program, launched in September, was already gaining traction by October, with 11% of U.S. consumers signing up within the first two weeks. The program has caught the attention of Amazon Prime members, too, with many of those expressing interest in Walmart+ saying they'd add it to their Amazon membership or drop Prime.
With fuel costs expected to rise, that Walmart+ perk — already deemed a significant lure by UBS analysts — could be especially enticing.
Above all, though, the retail giant's vast store network is one area that overshadows Amazon's comparatively paltry fleet. Amazon runs fewer than 600 stores, including Whole Foods. Walmart says that 90% of the U.S. population lives near one of its stores and that it offers delivery from 2,800 of its more than 4,700 U.S. locations, reaching 70% of the population. Walmart has moved to leverage that advantage through store-based tech and fulfillment innovation and by boosting its store-based fulfillment.
Still, this is about e-commerce, Anderson noted. "Ultimately, this is another accelerant of the shift to digital commerce (and a sign Walmart isn't putting all of its eggs in the store-based basket)," he said.