Amazon Prime has been an enormous influence on e-commerce, but this online juggernaut is beginning to show cracks. Now is the time for arch-rival Walmart to swoop in with a Prime-like offering that strikes at the weaknesses Amazon has introduced into its formidable loyalty program: price, a lack of focus, and competing subscription services.
Here’s the problem. Amazon has invested in its Prime program continuously, adding feature after feature in an obvious bid to make the service appear as valuable as possible. But while these additions are superfluous to many a user’s needs, everyone pays for them whether they’re used or not.
That’s part of the strategy, of course — if you know your customer won’t stop paying for a subscription, you can use that to squeeze the life out of other subscriptions they might pay for, and redirect that money to yourself. Prime Video and Music, for example, are clearly meant to take the place of Netflix or HBO and Spotify or Apple Music. Why pay for two? And if you have to choose, well, it’s easier to quit HBO than Prime.
This only goes so far, though. For years users have been subject to these pressures, watching the price of Prime rise all the while, and meanwhile other services are getting better and better. Streaming services and exclusive content have multiplied, and Prime users are frequently left out in the cold.
Photo storage? Isn’t that free everywhere? Twitch Prime? Is that really useful for millions of working families? Prime Originals? Not exactly raking in the Emmys. But still… it’s Prime. It’s necessary.
The only one who can realistically break this deadlock is Walmart. Not by providing the same thing as Amazon, but by providing something simpler and more focused, taking over the workhorse duties of Prime (shipping, sales, some basic media of opportunity) at a much lower price, granting the customer freedom to pursue their own choice in subscriptions while not meaningfully affecting their online retail experience.
What would this Walmart offering consist of? They already offer free shipping on a lot of items, free store pickup, and so on. You don’t need to use your imagination here. What would make this better? Free 2-day shipping on all items with no minimum amount; grocery and secure package delivery; a set of basic TV and music streams or even just a partnership with a couple existing products; and lastly some in-store benefits like members-only promotions and perhaps even early access on Black Friday. (Plus extra perks at sub-chains like Sam’s Club.)
Leveraging Walmart’s brick and mortar presence is important, but it’s hard to say what they have the leeway to try there, as it’s likely a delicate balance. But it’s a major advantage to have regular visitors to major retail locations, whereas Amazon has to either home-deliver or install lockers.
There are already indications this is happening — a pilot with a smart-lock company for home delivery, a rumored streaming service, cashierless(ish) checkout (even easier with an account), revamping of existing grocery delivery partnerships, emphasis on cloning or promoting existing services that match or exceed Amazon’s… it looks a lot like a shift to an end-to-end loyalty service.
There are rumors of a Microsoft-powered standalone smart device, but that might conflict with existing voice-ordering partnership with Google. Still, voice assistants are hot and Walmart needs an answer to Alexa if it wants to compete directly with Amazon in the living room. A possible acquisition of Shopify could conceivably broaden the company’s reach considerably as well.
How much would it cost? I’d say if they go about $50 per year they’re asking for trouble. It’s one of those magic numbers not just on its own, but in relation to Amazon’s $120 per year. $60 would be merely half price — $50, why that’s positively generous!
And the considerable savings opens up a bit of cash for secondary subscriptions like Netflix, which ends up, ironically, causing consumers to lock themselves into Walmart just as they were with Amazon, since once again they can’t switch easily! But they will almost certainly be getting more for their money.
Naturally $50 won’t pay for all that stuff on Walmart’s side — but building brand loyalty on the scale of years, while sucking a customer from a competitor… that’s worth spending a little cash for.
Timing-wise they’d want to announce this well ahead of the holidays — at least three months. First three months free if you sign up now and all that. It’ll be a big cash outlay but you don’t unseat a titan like Amazon on a shoestring budget. You do what it takes to put items in carts and go from there.
Walmart won’t risk its business on this, but it makes sense to do it now and do it with vigor. Walmart doesn’t get by on word of mouth — it needs a full court press ahead of Amazon’s busiest period, in which it can unequivocally say “This is the better option for you. Switch now and you’ll never look back.”
The real question is: what will they call it? MartLand? WalSmart? Or perhaps… Wal Street?
Latest posts by Sachin Iyer (see all)
- BlockFi just gathered up $50 million to lend to bitcoin and ethereum holders who don’t want to cash out (yet) – TechCrunch - July 25, 2018
- Valve’s answer to Discord is now live for everyone – TechCrunch - July 25, 2018
- Segway’s whacky new roller shoes will cost $399 – TechCrunch - July 25, 2018