In a highly competitive retail environment, Amazon and Walmart have used varied strategies to outdo each other. Often, these tactics include creating responses to the other’s popular services. Walmart Shipping Pass tried to compete with Amazon Prime. The program ended this week. Instead, Walmart unveiled a new shipping policy. Could this new policy have an effect on online retailers? Signs are already pointing to yes.
SO, WHAT WAS SHIPPING PASS?
Shipping Pass was designed to compete with Prime. It was Walmart’s answer to the unlimited 2-day shipping offered through the membership service. While only one of the benefits of Prime membership, it was the most popular. It is estimated that almost half of the households in the United States are Prime members. Walmart offered Shipping Pass at $49, half of what Amazon charged for Prime. However, Walmart did not see a lot of growth from this effort. Therefore, the mega-retailer decided to cut the service all together.
HOW WALMART IS CHANGING THE SHIPPING GAME
With the scrapping of Shipping Pass, Walmart has decided to change the game and offer shipping in a new way. The e-commerce giant will no longer require a membership for 2-day shipping. Also, it has dropped the minimum purchase by $15 to $35. Walmart is looking to appeal to the other half of households (and steal a few away from Amazon) with this concept. Other large retailers have already started offering two-day shipping or lower minimum purchases for free shipping. None have combined the two, though. If Walmart attracts non-Amazon customers with this plan, other retailers will also alter their shipping policies.
HOW DOES THIS EFFECT E-COMMERCE?
Consumers now want instant gratification. 2-day shipping is the solution; it can satisfy the consumer and provide excellent customer service. How does that help retailers who sell through e-commerce sites? Amazon realized that it was very important to have their warehouses stocked with items from its retailers. Retailers who allow Amazon to fulfill their orders and have them in the warehouse can participate in Prime programs.
Walmart will most likely do the same in this case, even if it means using their stores to facilitate orders. If Walmart does allow retailers to be part of their 2-day shipping, it will benefit the retailer as well as the consumer. Since they will have more products to choose from, consumers will make larger purchases and purchase more often. Overall, Walmart’s new competitive shipping plan is guaranteed to have a huge effect on online retailers shipping procedures.
Sharon Shichor is the CEO of Eighteen Knowledge Group LLC, your solution and knowledge base for brand building and getting your products in the hands of consumers. With over 15 years of wholesale-retail experience, she speaks the language of Walmart fluently.