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If Two-Day Shipping Is 'Table Stakes' For Wal-Mart, It Should Go 'All In'

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Wal-Mart Stores Inc (NYSE: WMT) believes two-day shipping is merely "table stakes" then the company has no choice but to go "all in" to beat Amazon.com, Inc. (NASDAQ: AMZN)

According to Gadfly's Shelly Banjo, Wal-Mart's move to ditch its ShippingPass program is the right move but winning over clients from Amazon won't be easy. Specifically, Amazon boasts 65 million Prime members that currently don't need to worry about order minimums while Wal-Mart shoppers need to spend at least $35 to qualify for free two-day shopping.

Moreover, Amazon Prime users rush to put in an order for toilet paper and other mundane items as soon as they run out. They certainly aren't going to be waiting around days to fill their online basket with $35 worth of goods.

"If shoppers have to stop and think about a minimum order amount when shopping at Walmart, then they might skip the sale completely -- or just jump to Amazon instead," Banjo argued.

So Wal-Mart's offer of free two-day shipping with no annual membership simply isn't good enough. Add in the fact that Amazon Prime comes with free services such as streaming video and Wal-Mart appears to be even further behind.

Another factor to consider? Since there are already tens of millions of households that subscriber to Amazon Prime, the e-commerce's factories are already optomized for two-day deliveries, so in many cases non-Prime members benefit from two-day shipping.

Wal-Mart shouldn't let a "measly" $35 shipping minimum hold up its progress and the company needs to "go all-in." The retail giant needs to take a hit on its profits in the short term and hope to gain share away from Amazon and try to win over the very long term.

 

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Posted-In: Amazon Prime Bloomberg Gadfly retailers Shelly Banjo ShippingPass Wal MartTech Media