Why Walmart's Shipping Pass May Win With Shoppers
Thought Leadership In Action
In the battle of every retailer versus Amazon.com, Walmart is preparing to take direct aim at the latter’s popular Primemembership program this summer with the introduction of Shipping Pass. For $50 a year – half that of the $99 Amazon Prime program – Shipping Pass members will receive free three day shipping on Walmart.com orders; it’s a bid to promote loyalty for the Bentonville-based behemoth and keep wandering shoppers from clicking over to Amazon and competing retailers as the retail world becomes increasingly digital.
It’s an interesting move for the discount giant, whose shopper wheelhouse includes lower income, budget-focused families. Would current Walmart shoppers be willing to invest in a $50 free shipping program? And, would the Shipping Pass discounted price entice Prime loyalists to change allegiances? Of course, one can only answer these questions by asking shoppers themselves, which is exactly what Prosper Insights did in our latest consumer survey.
With Shipping Pass yet to debut, we kept our inquiry simple and asked shoppers about the likelihood that they would subscribe to Walmart’s latest endeavor. Among the more than 6,000 U.S. adults we talked to in June, just 12.4% responded that they were “likely” or “very likely” to sign up for Shipping Pass, which equates to an estimated 18 million households. (This figure rises marginally to 14.0% among Walmart’s most loyal shoppers.) While 18 million is a lot of households, this figure pales in comparison to Walmart’s overall retail strength as well as the size of the Amazon Prime membership base. By Prosper’s own estimates (and consistent with figures from Consumer Intelligence Research Partners), Prime memberships have swelled to a 38 million households, more than double the number of those considering signing up for Shipping Pass.
So why could Shipping Pass be a win for Walmart? A look at the shoppers considering Shipping Pass would make any retailer salivate these days. Nearly half (45.7%) of those “likely” or “very likely” to subscribe to Shipping Pass were identified as Millennials (born 1983 to 1997), that oft-sought, hard-to-win group of trendsetters and the next generation of big spenders.
Those considering Shipping Pass also hold more spending power than typical Walmart shoppers, presenting an opportunity for the big discounter to reach shoppers with bigger pocketbooks. Potential Shipping Pass subscribers earn nearly $63,000 a year, about five percent higher than average Walmart devotees. Additionally, nearly three out of five (57.1%) of those considering Shipping Pass are male. While women (particularly moms) are generally highly sought-after by mass market retailers, men have historically budgeted more for key buying occasions (like the winter holiday season) than their female counterparts. Also eschewing coupons and sales in favor of a buy-it-and-be-done-with-it shopping strategy, men are a potentially lucrative segment to attract.
The caveat for Walmart, however, is that its potential Shipping Pass subscribers are 50% more likely than average to already have a Prime membership. While the thought of free shipping continues to make online purchasers starry-eyed, Walmart is still only offering free three day shipping. Amazon Prime may be double the price, but its members receive TWO day shipping, plus digital media content and more. Additionally, Amazon courts a loyal following of shopping vis-à-vis a history of customer service excellence.
Also playing into Amazon’s favor is its established online presence; the online giant serves not only as a shopping destination but also a de facto search engine. Among shoppers simply scouting product online, Amazon.com is the site they are most likely to head to first (32.2% indicate so), ahead of Google.com (22.2%), while Walmart.com (2.5%) severely lags.
While Walmart’s Shipping Pass program is attracting the attention of some very desirable shopping segments, the big discounter is almost certainly facing an uphill battle against Amazon. All told, Walmart is offering a lower cost alternative, but Amazon has already made a strong value proposition to shoppers. And in an environment where consumers remain cautious with their spending, two online memberships for free shipping may prove to be one too many. We’ll see who consumers decide to champion – when they vote with their wallets.
No comments:
Post a Comment