Among other developments, news broke out on Tuesday that Walmart (NYSE: WMT) is preparing to launch its own delivery membership that would compete with Amazon Prime. Considering just how successful the Amazon Prime program has proven to be so far, especially during this coronavirus epidemic, the prospect of Walmart getting in on this area is a highly appealing prospect for existing shareholders.
A news report came out that went on to say that the retail giant expects to launch its own membership plan sometime this month. While Walmart won’t be offering the same product categories that Amazon does through its platform, what Walmart will offer is same-day delivery for groceries. This new membership program will also include discounted fuel from Walmart gas stations alongside some other perks.
The program, originally known as Walmart+, was meant to be debuted back in March or April, but the retailer ended up pushing back its plans due to this coronavirus outbreak. As for the price, Walmart plans to charge around $98 per year for this membership service, cheaper than the $15 per month or so charged by Amazon prime. A spokesperson from Walmart declined to comment on this leaked news.
While this is seen as a good move for the retail giant, Walmart will definitely face an uphill battle against Amazon’s already well-entrenched membership program. While Amazon doesn’t offer groceries, the company does have a much wider selection of products. The company also has been doing its best to attract households with less disposable income as well, a segment that has historically been a major shopper at Walmart.
The one good thing going for Walmart is that the public’s perception of Amazon has been worsening over the past year or so. Recent polls had shown that the overall positive impression of Americans had dropped substantially from 74% in February to just 58% in May. That’s a good opportunity for Walmart to capitalize on if it can.
Shares of Walmart shot up as much as 7% in response to the news, while Amazon’s stock stayed more or less the same despite the announcement of a potential competitor. Both Walmart and Amazon have been among the best performing large-cap stocks in the face of this coronavirus pandemic. Much of this is thanks to both company’s strong online presence, which has only further grown as more people chose to shop online instead of going in person to pick up something.
Walmart Company Profile
America’s largest retailer by sales, Walmart operates over 11,300 stores under 58 banners, selling a variety of general merchandise and grocery items. It’s home market accounted for 76% of sales in fiscal 2019, with Mexico and Central America (6%), the United Kingdom (6%), and Canada (4%) its largest external markets. In the United States, around 56% of sales come from grocery, 33% from general merchandise, and 11% from health and wellness items. The company operates several e-commerce properties apart from its eponymous site, including Flipkart, Jet.com, and shoes.com (it also owns a roughly 10% stake in Chinese online retailer JD.com). Combined, e-commerce accounted for about 5% of fiscal 2019 sales. – Warrior Trading News