Walmart is preparing to test a new, unlimited shipping service that will compete to some extent with Amazon Prime, but at a lower price point of just $50 per year. The shipping service will be offered to select customers on an invite-only basis starting this summer, offering more than 1 million products for free delivery in three days or fewer.
The company has not yet finalized what the service will be called when it launches into beta in the coming weeks, but, as with Amazon Prime, only a subset of the products Walmart sells online will be available for free shipping. These will be flagged or labeled on the Walmart website so customers can easily identify which items are eligible.
Online, the company offers over 7 million products for sale, but during the beta trials, 1 million-plus items will be eligible for free shipping through the program.
Walmart is not yet committing to rolling out the service to the wider public, but instead positions this as just another of the many market tests it currently operates, which are meant to gather data about customer interest and engagement with different ways of online and offline shopping.
Walmart has, over the years, run a number of e-commerce experiments, ranging fromsubscription-based sample boxes to local grocery delivery. Some of these tests didn’t pan out (like the former), but the company today continues to experiment with both local store pickup and/or home delivery of groceries in markets like Huntsville, Ala., Phoenix, San Jose, Bentonville, Ark., and Denver.
The idea with this forthcoming Amazon Prime alternative, however, is not necessarily to test whether customers want fast, free delivery (Prime has proven that they do) but whether Walmart could interest them in the option at a lower-price point.
In particular, Walmart is determined to test the theory that what appeals to customers the most is not the speed of Amazon’s service or the newer “same-day” services now gaining traction, but the reliability of these options. That is, you know with Prime your orders will arrive in two days. For half the price (Prime is now $99/year), would customers wait an extra day?
“One of things that we’ve heard from customers is that they want shopping that’s predicable and they want it to be affordable,” notes company spokesman Ravi Jariwala. “[This test is] really to understand is this yet another new way that we can serve customers?,” he says.
Supporting Walmart’s theory on customer interest in the matter is a 2013 comScore study that found that 92 percent of consumers were willing to wait four or more days if free delivery was provided. These customers chose the most economical shipping option three-quarters of the time, and only picked the fastest option 1 percent of the time.
However, Amazon Prime’s membership program is today far more extensive than a free shipping service, though that’s its big draw. It also offers members free streaming video and music, unlimited photo storage, access to the Kindle Lending Library and more.
Walmart’s lower-cost alternative only addresses the shipping aspect, though that could change in time. The company has other assets it could leverage if it felt the need to offer an Amazon Prime competitor, including its video streaming service Vudu. The service even offers a Chromecast-like stick called Vudu Spark, which at a retail price of $25 could be used as a loss leader to encourage sign-ups if Walmart wanted to go that route.
Walmart says the shipping service will “evolve with customer feedback,” which means that it’s already thinking about how it could make its service more on par with Amazon’s in the future.
It’s unclear how Walmart plans to select who will be given access to the beta program, but typically the company tries to find a representative sample of Walmart shoppers when trialing new programs. That’s why some of its more interesting experiments around things like grocery delivery aren’t necessarily in tech hotspots like San Francisco, but rather in suburban or even somewhat rural markets where shopping at Walmart is a part of everyday life.
The company’s official announcement comes on the heels of an in-depth look into Walmart’s business, published by The Information.