Rivalry in retail isn’t anything new. Macy’s and Nordstrom. Coke and Pepsi. The annals of American industry are filled with heated contests rivalling any Greek tragedy. Heated contests with more than their fair share of casualties.
But challenges in digital retail are on an entirely different playing field from their physical counterparts. The dynamics are different. The advantages are different. And the demographic is frequently different. Selling points can get lost during the translation from brick and mortar to digital sales. And if you’re not careful, so can your identity.
Walmart. In physical retail, its grasp is impermeable. But in eCommerce? Think of it as the Little Engine that Could. Walmart may enjoy a $524 billion annual revenue on account of its physical retail strength alone, but it’s historically lagged behind in online sales compared to the shadow of Amazon. That changed earlier this year when the retail giant announced a first quarter increase of 74 percent in online sales—almost three times the amount reported by Amazon, their chief online rival. And investors took notice. Walmart shares reportedly soared to 16 percent immediately following the announcement. Did Amazon finally grow too big for their britches?
Not necessarily. For the past fifteen years, Amazon has always relied on Prime Day as its own personal Santa Claus. The analogy is an intentional one. In 2019, Prime Day sales surpassed both Black Friday and Cyber Monday sales combined. And the phenomenon of Prime Day isn’t going away in 2020—except no one seems to be able to agree just when you can expect it to occur.
It’s a safe bet that Prime Day will occur, even if Amazon isn’t forthcoming on its exact date. And while Walmart has been hinting at their own competitive service to Amazon Prime for over a year now, they finally revealed Walmart+ is expected to launch later this month. Which just happens to be the slotted month in which Prime Day normally occurs.
What Is Walmart+?
While Walmart has yet to announce an official launch date for Walmart+, the service will consist of an online membership program similar in scope to Amazon Prime. Sources have told Vox: Recode that subscribers can expect to pay a flat rate of $98 a year (more than 20 percent less than the annual $119 fee for Amazon Prime) for benefits including unlimited same day delivery for groceries and merchandise, participating merchant, gas and prescription discounts, exclusive streaming video and audio libraries and early access to exclusive product offerings and promotions unavailable to non-subscribers.
Walmart+ : An Advantage Over Prime?
Outside of its price points, the structure of Walmart+ isn’t all that different from Amazon Prime. Nor are loyalty programs from any mass retailer a particularly new development. But the advantage Walmart+ has is in their existing core demographic.
Walmart has primarily dominated retail based on both name recognition and its pricing structure; a structure that ensures the lowest price available on brand name merchandise both online and offline. There is virtually no region in the US—urban, suburban or rural—that is free from the presence of Walmart. For customers, this can be a blessing. But for merchants, it can also be a curse.
Walmart’s underlying price benefit has held a much larger appeal to families who have had historically less disposable income than the average Amazon shopper. To Amazon’s credit, they have made attempts at meeting the needs of lower income customers. But Walmart’s reputation of heavily discounted brand name items precedes them. Selling on Walmart is a guarantee of high visibility for most vendors.
Except that visibility comes with a price. In order to compete on Walmart, vendors frequently find themselves having to sell more just to make any profit margin whatsoever. That’s because Walmart doesn’t just know their market. They set the standards for it.
Walmart+ : Too Much Too Soon?
The unprecedented sales jump reported by Walmart in the first quarter of this year was aided in no small part by the coronavirus pandemic. And with millions of American’s facing economic and workplace uncertainty, the prospect of additional discounts from a retailer they’re already relying on may be a heady one.
But Walmart’s always faced challenges translating to the digital realm. A poll from SurveyMonkey in conjunction with Fortune magazine released earlier this year revealed only 56 percent of Walmart’s online customers had a positive impression of the company in distinction to 74 percent of Amazon customers. And a recent benchmark report from the American Consumer Satisfaction Index indicates that Walmart falls at the bottom of the list in terms of customer service.
2020 has seen unprecedented eCommerce growth. And as more customers grow comfortable with purchasing both essential and nonessential items online, that growth will only continue to climb well beyond the immediate future. That Walmart needs to adapt to this digital shift is unquestionable. Whether they’ll succeed in competing with Amazon is something only customers will decide.
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