Walmart to Launch Membership Program to Compete With Amazon Prime

Walmart is launching a new subscription service later this month called Walmart+ that closely resembles Amazon Prime, multiple sources told Recode last week. According to the sources, Walmart+ will cost $98 a year, and will include perks such as same-day delivery of groceries and general merchandise, discounts on fuel at Walmart gas stations, and early access to product deals. Members will also be able to reserve grocery delivery slots and receive open-slot notifications, as well as have access to Walmart’s new Express two-hour delivery offering. In addition, members will be able to use a Scan & Go service that allows them to check out in Walmart stores without waiting in line, as well as access to a Walmart+-branded credit card.

Introduction of the service was pushed back from the spring because of the COVID-19 pandemic, according to Recode, and it's unclear if it will launch nationally or on a regional level.

Total Retail's Take: While Walmart hasn't confirmed the launch of Walmart+, sources told Recode that the initiative is a top priority for Janey Whiteside, the company’s chief customer officer. CEO Doug McMillon has also been active in planning the initiative. And it's clear why it's important to Walmart's top brass: If it enjoys just a fraction of the success of Amazon Prime, Walmart should be pleased. Amazon recently said it has 150 million Prime subscribers globally (each paying $119 annually). However, launching Walmart+ during the current retail climate could present challenges for the retailer. After all, it's launching a program that's asking customers to spend more with it than they have during good economic times. And, perhaps most problematic for Walmart is the fact that more than half of its top-spending families already have Amazon Prime memberships, so will they need to subscribe to another? And finally, a subscription model can negatively impact supply chains if they're not implemented correctly.

"Subscription services such as Amazon Prime, Walmart+, Target Subscriptions and similar programs have major supply chain implications that big-box retailers should be prepared to address," said Phil Beane, senior vice president of global field operations at apexanalytix. "Added convenience for customers also means an added layer of complication in the supplier management process — one that companies with streamlined processes for vetting and onboarding new vendors are more apt to handle." What's more, Beane said, retailers also need to mitigate any impacts on existing relationships and contracts with suppliers when rolling out a subscription program, including "proactively updating shipping schedules or the amount of product they’re purchasing.”