Amazon vs. Walmart: Who Has the Better Shipping Deal?
As if the coverage of the two companies hasn’t made it clear enough, let me start by spelling this out for you: Amazon and Walmart are clearly having it out against one another. Over the last month or so, the two sides have positioned and re-positioned themselves in order to better compete with one another in the online retailing space.
(To be frank, Walmart has had to be the aggressor here because of how much business Amazon has poached over the last few years. And Amazon, for its part, really only “countered” because they can, not because they have to.)
A quick recap: Last month, Walmart took a bold step and decided to undercut Amazon’s free-shipping qualifiers by offering free two-day shipping on any order of $35 or more, dropping their $49 ShippingPass membership program (a clear shot at Amazon’s Prime program) that offered the free two-day perk. Amazon, which still offers free two-day shipping to Prime members, had offered a free shipping perk but without the two-day guarantee on any order of $49 or more. That changed this week, though, when they announced that they’ve lowered the threshold to $35—but still without the two-day guarantee.
Bolstering Walmart’s position in this “e-comm battle” is the news out of their fourth quarter earnings call, which showed that it grew online sales at 29 percent, compared to 22 percent for Amazon. And while it might be surprising to see Walmart outperforming Amazon, it really just shows that the changes the company has made in recent months—like their decision to scoop up Jet.com last year—are paying off.
Seems Mr. Buffett might’ve gotten out of Dodge a little too soon.
How the Deals Stack Up
But if it’s just the free shipping deals and everything involved there, who really is doing their customers a better service?
Let’s start with Walmart. Their deal, I can’t lie (even as a former Target electronics team member), is a sweet one. They’re offering free shipping on about 2 million items in orders that total more than $35. All Walmart customers qualify, and there are no fees, memberships, or other requirements necessary in order to be eligible for the free shipping. Additionally, while the $35 threshold is there for two-day home delivery, customers can get free two-day shipping on any order—no matter the total—if they choose to have it shipped to their local Walmart.
It’s a great offer. However, the one knock here is the shortfall in terms of the number of items available for the two-day shipping program. Sure, two million sounds like a lot—and Walmart is including some of their most popular products like baby necessities, pet products, certain foods, electronics, toys, and more. But they offer more than 30 million products on their website, so the program only extends to just under 7 percent of their total inventory.
Then there’s Amazon.
Of course, the e-comm giant still has their $99 annual (and $10.99 monthly) Amazon Prime membership program, which offers free two-day shipping on any order. And Prime comes with a whole host of other benefits, like access to Prime Video and Music services, unlimited photo storage online, Sunday delivery in a ton of markets, early access to certain deals, and more.
For non-Prime members, they don’t have access to all of those added benefits but they do get free (non-two-day) shipping on orders of $35 or more. And, that stated, the number of items eligible for free shipping totals around 50 million.
So, Who’s is Better?
Walmart’s free two-day shipping is the clear winner for someone looking for a quick buy or who’s in a pinch and needs something shipped quickly. Or, maybe you’re someone with commitment issues—of the online shopping variety—and you’re just not willing to buy into a yearlong or even monthlong membership. Walmart clearly has the better deal for you. And even though they're only including a fraction of their items, at least it's the most-shopped ones on their site. The bare necessities. And maybe that's just enough.
That said, Amazon comes in first for someone who’s a regular in the e-comm space. Its Prime membership is essentially a Sam’s Club membership for the online shopper, but the added benefits are above and beyond anything you’ll find at any traditional retailer. And it includes some 50 million items.
Prime also has exceptional benefits for Amazon as well. There are some 65 million estimated Prime members who spend an average of $1,200 annually. Quick math there puts the total spend at around $78 billion. And, according to more estimates, the typical Prime members spends more than double what a non-Prime member spends (roughly $500). So, I’d venture to guess that Amazon isn’t really sweating the moves Walmart is making. They’d be dumb not to go ahead and come somewhat close to matching their $35, two-day offer. But Prime—and the money spent by prime members—is their real driver of revenue.
In reality then, the answer is they’re both great. But they’re also not for everyone in their own respects.