Walmart Free 2-Day Shipping Challenges Amazon Prime
Looking to return to their former glory, Walmart is taking hoping to rout Amazon Prime by offering 2-day shipping on online orders. With the only minor stipulation that it needs to be more than $35, there is no additional fee unlike the annual $99 for 2-day shipping from Prime. Amazon's premium service quickly loses value if you don't use their video and music service, two services that struggle to beat dedicated premium services like Spotify and Netflix regarding content and price.
Walmart's about-face stems partially from their $3 billion (and change) purchase of Jet.com, a company built on the same principle. This also clears out Walmart's short-lived Shipping pass, a 3-day shipping guarantee for $50, that launched in last year in May. It quickly moved to a 2-day shipping and has evolved into the current model rolling out today.
“ShippingPass was a very critical part to getting us to where we are today,” said Ravi Jariwala, a Walmart spokesperson. “It validated the operational efficiencies of the new e-commerce fulfillment centers that we’ve built up over the last 18 months. It validated that they’re in the right locations to be able to cater to customers in their geographies, and be able to deliver within that 2-day or less period.”
Following Jet CEO Marc Lore retooling of the floundering Walmart, there were over 1,000 positions eliminated, including about 200 from Walmart's e-commerce division. The cuts were deemed "necessary for speed and simplicity," as Lore looked to restructure Walmart as a whole.
“Since joining Walmart, I’ve been getting a lot of questions about what’s next for Walmart.com," Lore told the media. "For me, the road ahead is pretty simple: We’ll keep our fanatical commitment to saving customers money – it’s who we are. And we’re going to be equally obsessed with saving our customers time."
“I’ve been here for four months, and I couldn’t be more excited about how fast we are moving. It feels like a startup.”
The real narrative is whether Walmart has the logistics, infrastructure, and sovereignty to turn a profit on two-day shipping, or if this is a move to slow-down Prime growth. If they want to outlast Amazon, playing their own game simply won't work. In the war of attrition, Amazon is agiler and doesn't carry the weight of brick-and-mortar. However, Wal-mart can build brand loyalty, leverage in-store pick-up in their 4,600 locations, and if they can sustain the new model, will force Amazon to rethink their Prime pricing structure.