Walmart+ Takes on Amazon Prime with Strong Marketing, Gains Subscribers in Intense Competition

Walmart Inc. seems to have found a genuine contender against Amazon Prime.

Information

Walmart Inc. appears to have acquired a legitimate rival to Amazon Prime. The largest global retailer initiated intensified marketing efforts for its Walmart+ membership in the latter part of the previous year. These efforts have resulted in substantial increases in subscriber numbers, as indicated by Bloomberg Second Measure, a platform that monitors anonymous credit and debit card transactions.

This encompassed a 15% increase in customer numbers from June to July.

Competing memberships: Walmart+ vs. Amazon Prime

Amazon.com Inc. launched its Prime membership in 2005, providing advantages like free shipping for certain items. This initiative has been acknowledged for retaining customers and increasing their expenditure. In 2020, Walmart introduced Plus, but details about its performance remain scarce. During the prior year's festive shopping period, the company altered its approach by enhancing marketing for the membership, presenting added benefits, and retaining the annual fee at $98 – approximately 30% lower than Prime.

"They are just starting to push the pedal on the gas," remarked Jennifer Bartashus, a Bloomberg Intelligence analyst, during an interview.

This Thursday, investors could gain additional insights about Plus as Walmart releases its second-quarter outcomes. Throughout this year, the retailer has profited from consumers' increased pursuit of economical options. This phenomenon has contributed to its enhanced market share in the grocery sector. A notable aspect of Plus lies in its provision of cost-free delivery for food orders exceeding £35. In contrast, Amazon imposes charges for transactions below £150.

Bloomberg Intelligence statement

As Walmart adds shoppers to its fast-expanding Plus membership program, their transactions are growing at a faster rate than at rival Amazon and its members are clearly shifting some spending away from grocers Kroger, Ahold Delhaize and Albertsons,' Jennifer Bartashus, senior packaged food and retail staples analyst said.

Membership estimates vary for both services, with Prime approximated at 150 million and Plus around 25 million. This provides ample growth potential for Walmart, translating to billions in yearly added revenue according to Bartashus. Joining Walmart+ prompts increased shopping frequency and consistent spending per transaction, as observed by Second Measure.

In a base scenario, where Plus reaches 23 million members this year, it could generate $100 billion more revenue as per Bloomberg Intelligence. If Plus maintains its current pace, incremental sales could reach $160 billion by 2027.

Walmart's Plus is also impacting Prime's growth. After Prime subscribers join Walmart+, transactions at Walmart increase while Amazon purchases remain stagnant, according to Second Measure. However, when loyal customers of grocery chains like Kroger, Ahold Delhaize, and Albertsons sign up, purchases slightly decline.