Walmart Pros Aren't Convinced It Can Beat Amazon At Its Own Game

Walmart Inc WMT has announced a new paid membership program as part of a push against Amazon.com, Inc. AMZN but some experts aren't optimistic the physical retailer can win the battle.

What Happened

Walmart's paid membership will reportedly serve as a rebrand of Walmart's existing Delivery Unlimited platform which costs $98 a year for unlimited, same-day delivery of fresh groceries. But early reaction to the offering isn't particularly encouraging for Walmart investors.

Stephen Beck, managing partner at management consulting firm cg42, told MarketWatch Amazon has evolved over the years to transform Prime membership "beyond prepaid shipping." Amazon's years of operation has also earned it a stellar reputation to the point where few customers will feel the need to either be a member of both or close their Prime account in favor of Walmart.

"Have you ever met anyone who said, ‘I'm really frustrated with Prime?'" Beck asked.

Why It's Important

Walmart's new service in some ways creates a sense of inconsistency with its e-commerce business. Forrester retail analyst Sucharita Kodali told MarketWatch Walmart's main message to consumers was "you didn't need to pay a fee for fast shipping." This message was also emphasized by Walmart's management in an October 2019 press release.

TLGG Consulting managing director of the Americas Katrin Zimmermann told MarketWatch that Walmart's focus moving forward should focus on solving problems for its own target demographic.

"Traditionally from lower income brackets, many of Walmart's customers don't own a credit card making it difficult for them to participate in e-commerce," she told MarketWatch. "Innovative solutions in the finance and mobile pay sphere might hence be a way for Walmart to retain these customers."

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