Skip to main content

Walmart Has a Challenger to Prime—But Is it Too Little, Too Late?

Walmart is taking a cue from Amazon’s playbook, developing its own response to the e-commerce giant’s popular Prime loyalty program.

A Walmart spokesperson confirmed the Bentonville, Ark.-based retailer is building a membership program, as first reported by Recode. News of Walmart’s incursion into the members-only arena serves as “a testament to the effect Amazon Prime is having on the retail and e-commerce industry,” said Bobby Greenberg, senior vice president of strategic consulting at Kobie, a loyalty marketing firm.

The spokesperson couldn’t confirm details on the perks Walmart+ will offer, but according to Recode, the plan is said to be a sort of relaunch of Walmart’s $98 grocery delivery service. Benefits could leverage Walmart’s extensive brick-and-mortar assets and include offerings like gas and pharmacy discounts, scan-and-go mobile self-checkout and ordering by text—which would revive some of the learnings from the company’s now-defunct Jet black shopping service.

“The biggest surprise about the Walmart program is that they launched one at all,” Forrester vice president and principal analyst Sucharita Kodali said. In its decades-long resistance to loyalty, Walmart took the stance that “’we will never give rebates to loyalty members. We would rather use that to lower prices for everyone’,” she added.

Walmart will have to build a membership program offering “discounts and services that go well beyond just grocery delivery,” said Mousumi Behari, digital strategy practice lead for Avionos, a provider of digital commerce solutions. The mass merchant, she said, is “still attempting to catch up on lost revenue and broaden [its] digital reach to connect with…customers. They’re 15 years late to the digital game and are still working to diversify their digital offerings as well as Amazon has.”

Although Walmart+ remains under wraps for the moment, Nicole Amsler, vice president of marketing for AI-powered marketing platform Formation, argued that the retailer “hasn’t made membership central to its business the way Amazon has.” The retailer’s 2019 foray into unlimited grocery delivery and 18-month Jet black experiment, she added, represent “small steps toward a more formal membership program.”

Related Stories

Whether budget-conscious shoppers will flock to Walmart+ remains to be seen. Given Walmart’s famous “Save Money. Live Better” tagline, “customers shop at Walmart because of its low cost value proposition,” Greenberg said. “The jury is out on whether or not they will pay membership fees for more convenience-oriented benefits.”

Though Prime perhaps represents the crème de la crème in loyalty, these programs have been “wildly successful for retailers,” Kodali noted, “and it was one of the few levers that Walmart always had at its disposal that it never used.

“Now if it is trying it, that’s great,” she continued. “It will no doubt be successful even with a mediocre offering and very successful with a compelling one” that offers a suite of perks Amazon can’t replicate.

With the right perks, Walmart might have a hit on its hand. “Walmart is making an intelligent move by adopting this program model and offering fast and free delivery—a top motivator that 61 percent of shoppers said would convince them to invest in a premium program, according to our recent data,” said Tom Caporaso, CEO of Clarus Commerce, which designs loyalty programs for merchants.

A Walmart loyalty program “will collect valuable consumer data that will help the brand discern what other offerings consumers would like to see in the coming months, ranging from pharmacy and gas to beauty and apparel,” he added. “These insights, as well as adding in savings opportunities at gas stations and in their Rx sections, will be critical for Walmart to differentiate its program from Amazon Prime.

“This is especially true as more and more consumers anticipate personalized shopping experiences that make their daily lives easier,” Caporaso continued. “If Walmart is able to provide more surprise rewards, exclusive members-only deals and instant discounts down the line, we can expect Walmart+ enrollment to rise, even as Amazon Prime continues to thrive.”

Amsler agreed that personalization will be the central benefit of Walmart+. “Customers have high and consistently increasing expectations for personalization,” she said. “To meet these expectations, companies like Walmart need to be able to identify customers wherever they engage, which in turn means decreasing cash and non-member transactions, as a large proportion of these transactions makes it much more difficult to understand who customers are, and how best to engage with them.”

If it wants to win in a notoriously competitive climate, “Walmart can’t afford to treat every customer the same,” Amsler added. “To keep customers from defecting to Amazon, Walmart will need to lean into customer experience and personalization” and a smartly crafted loyalty offering “will have an essential role to play in this customer retention strategy.”

For now, though, Kodali think Walmart might want to rebrand the program. “The first thing they’ll probably need to do is change the name because a Google search turns up plus-sized merchandise which likely won’t change,” she said, adding that it “looks like they knocked off Disney,” whose newly launched streaming service follows an identical naming convention: Disney+.

And despite Amazon’s dominant position in domestic e-commerce—nearly 40 percent versus Walmart’s 5 percent—Kodali believes the store-based retail is competing for the online giant’s more moneyed clientele.

“Everyone in physical retail is fighting for the same dollars,” Kodali said. “Retail growth is slow, the web is taking more share and consumer spend is shifting to services over physical goods.”