Walmart will launch Walmart+ to compete with Amazon, which will only benefit Walmart’s current customer base instead of growing it.

WHAT HAPPENED: Walmart+ is an enhanced version of its membership program “Delivery Unlimited,” which costs $98 per year for unlimited same-day delivery of fresh groceries. Walmart+ will include unique perks like text messaging to place orders, discounts on prescription drugs and gas, and a Scan & Go service that enables faster checkout in-store. Walmart will start piloting Walmart+ next month with plans to test multiple price points.

WHY IT MATTERS

  • An improved membership program will help Walmart gain more ecommerce market share, but only from Walmart loyalists. Amazon accounts for 40% of all ecommerce sales in the U.S. and has over 150 million Prime members. Walmart comes in a distant second to Amazon, making up just over 5% of ecommerce sales. Walmart+’s unique benefits aren’t enough to inspire Prime members to make the switch or to subscribe to another monthly membership fee.
  • A new membership program is vital for Walmart to retain its customer base, but to recruit new customers, it should expand its presence in urban areas where there is an opportunity for growth. Its likely that urban customers are attracting the most growth in ecommerce sales, therefore, Walmart needs to be physically present in urban areas to draw new customers to Walmart+ and to better compete with Amazon. Introducing smaller format stores in cities across the U.S. could remind this demographic that Walmart is a viable option outside of Target and Amazon.