Walmart is ending its shipping membership program, an e-commerce initiative drowned out by Amazon Prime.
The multinational retail corporation decided to reinvent its discount shipping services, Walmart e-commerce executive Marc Lore said in a media briefing on Tuesday.
Walmart faced steep competition from Amazon Prime, which provides many more products available for cheaper, two-day shipping than did Walmart’s “ShippingPass” membership subscription. Walmart’s program was launched in 2015, and was overshadowed by Amazon’s domination in the e-commerce business.
The ShippingPass membership provided subscribers with unlimited shipping for a $49 a year flat rate, which is roughly half the price of an Amazon Prime subscription. The difference? Amazon Prime offers millions of more products.
About 40 million products are available for Amazon Prime’s two-day shipping, including a plethora of digital products and services including streaming video.
To stay relevant, Walmart is reinventing their shipping services
The retail giant is switching from a yearly $49 subscription fee to a standard $35 spending minimum for free two-day shipping, no membership required. However, only two million of the roughly 30 million online items sold by Walmart are eligible for the free two-day shipping special. Such products include dog food, non-perishable food items, and household cleaning supplies.
It may seem as if Walmart is making the move in their e-commerce business model as an attempt to get a leg-up on Amazon. However, the move is really just the adoption of a forthcoming industry standard in e-commerce.
"In this day and age, two-day shipping is really just table stakes- people shouldn't have to pay for it and certainly not a membership," said Lore
The reinvention of Walmart’s e-commerce business is in part an effort to retain potential customers lost to Amazon, a reality the retail giant increasingly worries about since roughly a third of their market are also Amazon customers.
According to Walmart, the two million products applicable to the new $35 minimum for free two-day shipping are the exact products that their customers will be looking to purchase.
However, Amazon does have one advantage: they’re a conglomerate.
Amazon not only dominates the e-commerce business, but they also are a big player in streaming digital content and are venturing into electronics, basic home goods manufacturing and even clothing.
The e-commerce giant even offers their own credit card, effectively sucking consumers right back into purchasing good and services from Amazon.
If Walmart wishes to truly compete against Amazon, they will have to innovate more than one aspect of their business model.
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