Amazon’s (NASDAQ:AMZN) retail business grew exponentially thanks to Amazon Prime, a service that was launched for a very specific purpose but morphed into something else entirely.
When the service started in 2015, its core offer was unlimited two-day shipping for customers as long as they paid a membership fee. Though there were a couple of exceptions, that was the main value proposition.
Amazon Prime has since grown into a service that offers one-day shipping, and despite increasing the membership fee ($14.99 per month or $139 annually), what the service currently offers has also significantly increased.
Apart from getting the same-day delivery, the service has gone above and beyond to ensure plenty of more orders reach the customer by the next day. The retail giant has also increased its product catalog to millions and added several other perks, such as Prime Video streaming.
Amazon’s main rival in the retail space Walmart (NYSE:WMT) has tried to compete with Prime by giving customers a variety of offers. While these offers have been helpful to the chain to a certain degree, they have basically been a watered-down version of Amazon Prime.
However, in 2020 the retail chain launched Walmart+ to leverage Walmart’s massive store footprint to compete with Prime effectively.
During the launch, the company said that Walmart+ would use the brick-and-mortar store’s unique assets to make life easier for busy families.
Apart from its powerful online presence, Walmart+ boasts of a reach of over 4,700 stores, with 2,700 stores offering delivery that matches Amazon’s same-day delivery. Members can receive unlimited free delivery from stores, access to tools that make shopping easier and faster, and fuel discounts.
With membership costs of $12.95 per month or $98 annually, the company has made significant improvements to Walmart+.
Walmart’s Main Advantage Over Amazon
It’s important to note that Walmart+ has significant differences compared to Amazon prime, which offers hundreds of millions of items. Walmart+ is a more focused service that leverages the chain’s stock in the more than 4,700 stores spread out in the U.S.
The service intended to capitalize on the one advantage Walmart has over Amazon: at least 90% of Americans live within a 10-mile radius of a Walmart store. This means that the chain can get items from its store to customers much quicker than Amazon, thanks to its vast network of distribution centers.
Undoubtedly this is an edge that Amazon has been looking to take away by building its fulfillment centers and getting into lower-cost grocery stores in addition to its Whole Foods locations. Walmart is now leveraging the classic grocery-store approach to attract more members to its Walmart+ service.
Walmart Improves Its Membership Service
Retailers and grocery chains have for long lured in customers using deals and coupons in a bid to make them loyal. Both loyalty programs and apps are a modern version of this, and Walmart just introduced a new reward system for its Walmart+ members.
The system allows Walmart+ members to earn savings towards future purchases. Here’s how it works. Say a member accumulates $10 in Walmart rewards after a couple of shopping trips. They can apply the savings during checkout so that if their purchase was supposed to cost $25, they now pay $15.
This is similar to Kohl’s (NYSE:KSS) model with its Kohl’s Cash. Amazon doesn’t have such a program, although its Prime members are eligible for discounts when shopping at Whole Foods. The system essentially uses your current to encourage you to shop there again.
As members look for products on the retailer’s app or website, they see an option to gain rewards for various items. Members can then add the rewards into their Walmart wallets and use them for future purchases.
While the program will start out based on purchases only, Walmart has said that there will be other ways of earning rewards in the future.
Featured Image: Megapixl @Wolterk
