Walmart comes after Amazon with free two-day shipping option

By Rakin Azfar

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February 2, 2017

The offering is a clear shot at Amazon

Retail giant Walmart is introducing a free two-day shipping option after axing its service meant to rival Amazon Prime, but the new offering now has Amazon Pantry set in its sights, as it looks to conquer mobile and digital retail.

The service is now available to all customers, no membership fee involved, and contains about 2 million items within its purview, including many of the quotidian purchases such as laundry detergent and toilet paper that Amazon Pantry is making a killing on at the moment. And despite the fact that it will be difficult to convince users who already pay Amazon Prime’s annual fee to migrate over to Walmart’s service, the move is currently a boon for non-Prime members who don’t want to pay fees for free shipping.

“This free shipping program reflects how WalMart’s Jet.com acquisition is fundamentally impacting the WalMart eCommerce direction,” said Marci Troutman, CEO of SiteMinis. “Free shipping is basically WalMart scrapping their fee based, two day shipping program ShippingPass.

“Marc Lore, who came to WalMart in the Jet.com acquisition and is now president and CEO of Walmart U.S. eCommerce, has said that free shipping are basic table stakes in the ground game of ecommerce and that membership fees are not necessary,” she said. “WalMart is going after business by putting 2 million items into the free ship program.

“This represents the most highly purchased items from the WalMart product listings and a significant chunk of their overall business. Consumers will use WalMart because of brand trust, service and the fact that they have recognizable stores locations that compliment the consumer shopping journey.”

Free two-day shippingWalmart’s free two-day shipping will be available on the items customers shop the most, including household essentials such as baby necessities, pet products, food, cleaning supplies and beauty favorites, as well as top electronics and toys. Many of these items are staples of Amazon’s Prime Pantry service, which allows Prime users to order up to 45 pounds of non-perishable goods for a small delivery fee, or for free if they order from a selection of featured items.

Walmart has also lowered the minimum purchase price for free shipping to $35 from $50, and is continuing to offer free shipping to ship-to-store orders.

Walmart is reducing its bricks-and-mortar presence in favor of ecommerce

Walmart recently shut down an offering meant to compete with Amazon Prime (and one that conspicuously looked like it) called ShippingPass, a two-day shipping program that cost an annual fee of $49.

Now, Walmart offers two-day free shipping on select items for no fee and a minimum of $35, compared to Amazon Pantry’s requirement of a Prime membership (which costs $99 annually) and a fee of $5.99, featured items notwithstanding. The move represents a severe undercut of Amazon’s business by Walmart, which has made its intentions clear since before its purchase of competing online retailer Jet.com.

Mobile shoppingThe success of Pantry and Prime at large, and the prospective success of Walmart’s new service, is largely predicated on mobile shopping. Amazon runs a significant amount of traffic through mobile devices, especially for items within the purview of Pantry that Walmart is also trying to sell.

And while the Amazon app is doing incredible numbers, Walmart will have to get its app in the hands of many more consumers if it wants to hold a candle to Pantry’s success.

The emerging rivalry between Walmart and Amazon has been making headlines

The retailer’s commitment to mobile has been the subject of much coverage, especially in the past year. Last October, it announced it will be scaling back the opening of new stores to focus on improving its mobile and online commerce channels, following many other big retailers after the industry as a whole saw a surge in mobile shopping and digital continues to dominate (see story).

The announcement evinces a desire to move past a mobile presence that merely complements its bricks-and-mortar presence, and its mcommerce ambitions (and the infrastructure it set in place last year) will be tested by intense competition from Amazon (see story).

“The neat thing is that WalMart has internal purchasing intel unlike most other companies,” Ms. Troutman said. “The shopping basket that consumers develop using a mobile device may be surprising after this new tactic on shipping is deployed.

“The goal, it would seem, is that convenience (which lends itself to mobile) is but one component to evaluate — pricing and availability are a few others to think about. When it comes to price, convenient service and availability, WalMart stands pretty tall in the saddle compared to some other ecommerce-only companies.”