On Tuesday, after months of rumors, Walmart Inc. (NYSE: WMT) finally unveiled its new subscription service in hopes of going head-to-head with Amazon.com Inc. (NASDAQ: AMZN)'s Prime service.
The service is called Walmart+ and will cost you $98 a year for a membership. The plan includes free shipping on orders $35 and over and same-day deliveries on specific items from stores, including groceries.
Members will also receive five-cent-per-gallon discounts on gasoline and will have the ability to scan items with the Walmart app while shopping in stores. This new process will allow them to pay and check out without waiting in line.
Walmart is calling this new subscription the "ultimate life hack," and it's a big jump from what the company offered before. Walmart+ will be replacing "Delivery Unlimited" - which cost the same amount, but was only limited to around a quarter of the 4,700 stores that will offer Walmart+ to customers.
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WMT vs. AMZN: Where's the Money?
Now, as I said earlier, Walmart+ was created in hopes of dethroning Amazon Prime. And while Walmart's yearly subscription fee undercuts Amazon Prime's by $21 - it's still missing some major benefits that Prime brings to the table.
Some of these benefits include no minimum purchase for free shipping, and Prime offers some hidden perks, including free music, TV and movie streaming, and unlimited photo storage.
So, I'm sure it goes without saying that Walmart has some significant catching up to do - and the company has already begun laying the foundation to expand the service over time.
But Walmart isn't down for the count - because it has one thing that Amazon doesn't. Proximity to its customers.
About 90% of Americans live within 10 miles of a Walmart. The fact that 2,700 of its stores will ship items on the same day may help it beat Amazon in delivery speed in many areas.
So, the subscription service battle has officially begun.
And Walmart+ really is off to a great start - the stock sure has reacted nicely, too. But if I'm being honest, I don't think the service carries the punch it needs to beat Amazon at its own game.
For me, the biggest obstacle that Walmart will face is obviously that $35 minimum for free shipping. This could deter many consumers, and this added in with the fact that Amazon just has a lot more goodies to offer (and has been offering them for much longer, strengthening its case for consumer loyalty), makes me believe that it's going to be an uphill climb for Walmart.
Now, I can't deny that Walmart is making a smart business move as this service proves that it isn't your regular old brick-and-mortar big box store. The retail giant is willing to adopt new ideas and concepts that, granted, they should have adopted years ago, but it still shows a willingness to adapt to the changes in the retail landscape.
However, when it comes down to it, I believe that the clear winner and candidate for handing us profits will be the company that always wins - Amazon. And that's why I'll be looking to buy Amazon on any dip and staying away from Walmart (and all the hype) for the time being.
As I've Mentioned Before...
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