The battle among the world’s largest retailers has been ongoing for decades. Amazon, Walmart, Target and others jockey for position in a landscape that is constantly changing. Not only have consumer buying habits changed amidst a global pandemic. But likewise, customers are increasingly expecting more of retailers including same-say delivery and discounts. It’s here that the real battle among retailers will ultimately be won or lost. And both Amazon and Walmart are approaching these challenges in similar yet very different ways.
On September 15th, Walmart launched its member subscription service called Walmart Plus. Without question, this new offering is meant to complete with Amazon Prime services, which is now 15 years old. But despite similar cost structures, Walmart Plus offers different value on the surface than Amazon Prime services. But deep down, both programs have a similar goal that goes beyond sales revenues. And understanding this goal helps understand why both retail giants are likely to be around for many decades to come.
“The power behind Walmart+ and its data is that it positions Walmart to leverage AI/machine learning to implement a next-generation of customer management that makes it into an even better tool for meeting the unique needs of its customers.” – Bill Bishop, Co-founder and Chief Architect of Brick Meets Click
Comparing Walmart Plus to Amazon Prime Services
In essence, both Walmart Plus and Amazon Prime represent consumer subscription programs that allows members perks. And for the most part, they are similar in price. Amazon Prime services cost $119 a year or $12.99 a month. Walmart Plus costs $98 a year and $12.95 a month. Likewise, both offer same-day delivery for groceries and a variety of other retail items. But that is where the similarities end. Depending on a customer’s needs, one or both may look appealing.
Amazon Prime services more than 150 million people already and offers over 3 million products for sale. In addition, it provides members with a variety of streaming services as well as programs like Prime Reading and Prime Wardrobe. And it is aligned with Whole Foods as well as Amazon Fresh, which target a different grocery consumer. These features along with discounts for college students and those receiving government assistance attract many.
Walmart Plus has its unique offerings as well. Though Walmart Plus only offer around 160,000 products for delivery, its groceries in particular are more affordable. This will be attractive to many customers, especially those accustomed to shopping there. Walmart Plus also provides discounts for members on fuel as well as in-store conveniences. Specifically, its Scan-and-Go feature and access to Walmart Pay means in-store customers don’t have to wait in lines. Though it lacks the same variety and offerings as Amazon Prime services, Walmart Plus does have its “pluses.”
“Supporting small businesses is a fundamental part of [Amazon’s] work … our success depends on their success. This has been a challenging year for many small businesses, and our commitment to adapting together for the future has never been more steadfast.” – Dharmesh Mehta, Vice President, Amazon
Amazon Prime Goes Beyond Traditional Customer Loyalty
Since its inception, Amazon Prime services have attracted millions of customers who consider Amazon their go-to for retail items. In this regard, its direct customer loyalty success with this program has been tremendous. For the last six years, the company has held its annual Amazon Prime Days, where items are deeply discounted for consumers. And even this year amidst a pandemic, Prime Day was highly successful. But the company’s real success wasn’t necessarily with those purchasing items. Instead, the big winners were small business vendors selling on Amazon’s site.
This past year, Amazon Prime Day saw third party sales on its site increase 60 percent. This generated roughly $3.5 billion in sales for small businesses as a result. While Amazon certainly wants to attract customers and keep their loyalty, they also see these vendors as essential. Therefore, Amazon Prime services, through Prime Day, is another way that this program provides a competitive advantage. Amazon must keep not only its customers happy but its small business partners satisfied as well. Amazon Prime services is one way of achieving this.
“The big news is that it shows Walmart has rethought its approach to loyalty and will now be leveraging customer management. And this shift has significant implications for every retailer that competes with Walmart.” – Bill Bishop
Walmart Plus Targets a Seamless Customer Experience
As a customer subscription membership, Walmart Plus acknowledges that customer loyalty is important. Once subscribed, customers will find it easier to shop Walmart products and use its delivery services. But there’s more to it than that. Walmart Plus wants to focus on the customer experience not only online but also in-store. By creating greater convenience at every point of contact, Walmart enhances customer value. As a result, Walmart Plus members begin to view Walmart’s value as a low-cost retailer. They also appreciate the company as one that is extremely convenient and meets their expectations.
Of course, Walmart must also continue to meet customers’ cost expectations as well. As subscription memberships grow with Walmart Plus, this becomes even easier to achieve. And Walmart is already off to a good start. With Walmart Plus only available for a little over a month, over 11 percent of U.S. households already have memberships. As this figure grows, Walmart has the opportunity to establish stronger relationships with consumers. This is not only because of Walmart Plus. It’s also because it operates more than 11,000 brick-and-mortar stores globally. A seamless value-rich experience offers great potential in gaining customer allegiance.
Consumers Win in the Retail Wars
Amazon Prime services offer extensive variety. Walmart Plus provides in-store and online conveniences. And both are attractive for many e-commerce needs that require fast delivery. But the choice for consumers isn’t whether to have one or the other. It’s likely to be whether or not to have both memberships. In fact, 45 percent of current Walmart Plus members already use Amazon Prime services. Both retailers’ subscription programs are attractive, and both companies are committed to creating consumer value. As a result, both are likely to lead the pack of giant retailers for some time to come.
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