Walmart's recent launch of Walmart+, a membership service offering free grocery and household delivery, as well as mobile checkout for in-store purchases, signals the start of something important:real competition with Amazon Prime.
It's clear that shoppers will purchase multiple membership subscriptions when they provide unique value, especially at the household level: think Netflix, Spotify, HBO, Peloton. However, given the considerable potential audience overlap between Walmart+ and Amazon Prime, it's likely that Walmart will gain a large portion of its customers from Amazon Prime members unsubscribing.
That said, stealing some audience share isn't all it's going to take to compete against an established behemoth. For years, independent retailers have been trying and struggling to compete against Amazon. The difficulties stem from a lack of technology to perfect the buying experience. Walmart has certain advantages in taking on Amazon, as we've watched its rise as an e-commerce competitor amid the pandemic.
How has Walmart made inroads? This year, the company has made several notable e-commerce moves, from opening up a marketplace for Shopify sellers to providing approved sellers access to Walmart's supply chain. Walmart is also utilizing its huge brick-and-mortar footprint to provide an omnichannel customer experience - a point of fundamental advantage over Amazon. Retailers should take note, as one of the major hurdles to converting traditional in-store shoppers to online shoppers is the hassle of checkout and return.
Walmart+ is the first real competitor to Amazon Prime, and it won't be the last. But how exactly will Walmart+ impact the e-commerce space for consumers and retailers? The service signals the start of a broader shift in retailers directly challenging Amazon and threatening the platform as a shopper's default choice. There is potential for other independent retailers, individually or collectively, to grab customers with their own technological innovations. The goal: removing Amazon as the default choice for shoppers and shifting more towards a discovery-based system where the best products and brands win out.
