Walmart Inc. (NYSE:WMT) late Monday rolled out its Walmart+ subscription membership program that promises free same-day deliveries on groceries and general merchandise.
The initiative, which will cost members $98 a year or $12.95 per month, expands a pure e-grocery delivery program that Walmart launched late last year. The new service will offer similar benefits to Amazon Prime, Amazon.com, Inc. (NASDAQ:AMZN) successful online offering, at a lower price. Amazon Prime costs $119 a year for unlimited one- and two-day shipping, and offers same-day deliveries for an additional fee. Prime has 150 million worldwide members. The Amazon Prime package also includes movies, music and other benefits, making it what is known in retail as a "category killer."
Same-day deliveries will be available on approximately 160,000 items on Walmart's website, the Bentonville, Ark.-based company said. Amazon Prime has millions of products available on its site.
The Walmart program is designed in part to protect its grocery market share against rivals who threaten it on the store and on-line levels. Walmart generates 55% of its revenue from groceries and needs to defend its online share while trying to add customers, said Brittain Ladd, an e-commerce consultant.
Walmart' fulfillment strength is its vast store network, which includes about 4,800 stores, more than 3,500 of them supercenters. About 2,700 of those stores are structured to support same-day deliveries, the company said Monday. Amazon, by contrast, operates 572 stores in the U.S. and Canada, most of which are Whole Foods Market grocery outlets. The relative lack of physical density forces Amazon to operate in a different manner than traditional big-box retailers. Yet it remains the dominant player in e-commerce, with about a 45%-50% share of the market.
The Walmart+ service is unlikely to pose a competitive threat to Amazon, and Walmart executives didn't position it in such a way. The objective is to leverage the "company's unique assets" to better serve its customers, not to compete with anyone, said Janey Whiteside, Walmart's chief customer officer.
The new service will be added to Walmart's free curbside pickup, next-day and two-day delivery programs, the company said.