Competition breeds familiarity in Amazon, Walmart offerings

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Competition breeds familiarity in Amazon, Walmart offerings

By Dan Berthiaume - 09/04/2020

America’s two biggest retailers are becoming increasingly alike.

The classic 1969 Beatles song “Come Together” was originally recorded for Timothy Leary’s brief California gubernatorial campaign, but could also serve as a theme for Amazon and Walmart’s retail rivalry. Not that the two omnichannel behemoths are working together – far from it. 

But in several key areas, efforts at competitive differentiation are producing some surprising similarities. For example:

Members only
Amazon has offered its Prime paid membership program in the U.S. since 2005. With more than 110 million estimated members, Amazon Prime is arguably the most successful retail loyalty program of all time.

Walmart is launching its own highly anticipated paid membership program, Walmart+, on Sept. 15. The new program will cost $98 a year, or $12.95 a month. Amazon Prime costs $119 a year, or $12.99 a month, with no minimum order needed to qualify for free shipping.

The programs are not identical. Walmart+ includes gasoline discounts of up to 5 cents a gallon and access to the chain’s Scan & Go self-checkout app. Members receive unlimited free delivery on eligible orders of $35 or more, with many free shipping items delivered directly from local stores (more on that shortly). Meanwhile, Amazon Prime offers unlimited free delivery on all orders of Prime-eligible products and includes digital benefits such as free content streaming.

Although Walmart insists Walmart+ is not intended to compete with any other service, it appears the discounter has realized that membership has its privileges, including for retailers offering paid loyalty programs.

Look what’s in-store
As mentioned above, Walmart has the built-in advantage of being able to fulfill many online orders from stores. This reduces both the time and expense of the critical “last mile” of online deliveries. According to Forbes, Walmart will be operating 1,600 stores across the country with extra warehouse space to support fulfillment of online orders.

Amazon, which in comparison operates more than 110 warehouses across the U.S., is stepping up its usage of brick-and-mortar Whole Foods stores to support fulfillment of its fast-growing online grocery business. The e-tail giant recently opened a delivery-only Whole Foods “dark store” in Brooklyn to speed up online grocery fulfillment in that area.

With Amazon’s online grocery sales tripling year-over-year in Q2 2020, it’s not hard to imagine Amazon using more Whole Foods or Amazon Fresh units as dark stores. Amazon could also always expand its store-based fulfillment of online orders from its brick-and-mortar Amazon Books and/or Amazon 4-Star locations.

To your health
Walmart and Amazon have both made increasing inroads into the healthcare space in the past year. Walmart’s activities in the health vertical include opening five dedicated Walmart Health stores, acquiring the CareZone telehealth app, and preparing the launch of employee telehealth services in January 2021.

Meanwhile, Amazon is introducing Amazon Halo, a service that combines a suite of AI-powered health features with the new Amazon Halo app and Amazon Halo Band wearable device. Other recent examples of Amazon’s continuing healthcare push include enabling Michigan-based health insurer Priority Health to open a branded Amazon storefront and a pilot to open neighborhood health centers for its U.S. warehouse employees and their families.

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