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The subscription games

Walmart+ takes on Amazon Prime

 

Every other Wednesday, h/commerce provides in-depth analysis of the most impactful trends reshaping retail.

©Walmart+

For quite a long time, most consumers were just not that interested in online grocery shopping. But that all have changed with the arrival of the global pandemic, when ordering online for grocery for delivery or pickup in store – has suddenly became a lot more appealing for shoppers.

Even though the e-Grocery trend was already starting to take off before the outbreak, the stay-at-home measures in the wake of the virus have made online grocery shopping explode globally. Yet, the phenomenon is particularly palpable in the United States, where Amazon is causing disruption via its Amazon Prime free delivery, Amazon Go cashierless technology and the opening of its very first conventional brick-and-mortar grocery store in California. Jeff Bezos has declared grocery war in the United States and all other retailers are working to serve up extra benefits and fast delivery in order to extend their e-commerce reach à la Amazon.

For that matter, the eGrocery market has never been so promising in the US as we discover in the recently released study the “eGrocery’s New Reality” by Mercatus and Incisiv. The study that interrogated nearly 60.000 U.S consumers across 20 states is shedding a new light on the state of the post-pandemic grocery e-commerce.

Before the outbreak, e-grocery sales were reckoned at 4,3% of the 2020 total grocery market and projected to hit 13,5% in 2025. However, changing consumer behaviour amid the Covid-19 shows the industry is on its way to surpass a 20% share in 2025.

Furthermore, the free and fast shipping democratized by Amazon Prime is increasingly an expectation among online shoppers and always the customers favourite. Reportedly, 75% of consumers expect from other brands and retailers the same level of services that Amazon provides them (source: The Future Shopper 2020)*. Furthermore, according to Capgemini study, consumers want faster deliveries with 55% admitting that express shipping like two-hour deliveries would increase their brand loyalty.

Threatened on grocery field and the last mile capacities of Amazon, Walmart – the biggest retailer in the world is searching to bolster its e-commerce share. Walmart has seen its online business grow during the outbreak and is now doubling down on its ambitious e-retail goal to help it keep expanding. While Amazon has 15 years lead on delivery membership and solidifying its lead (with 150 million subscribers), Walmart is playing catch-up and nudges shoppers into brand new membership programme: Walmart+.

A different kind of membership

 

Amazon Prime is certainly problematic for Walmart, as half of its top-spending families have now Amazon Prime membership. While the overall grocery share of Walmart is much larger than Amazon’s, the fear of the world’s biggest retailer is that its top customers eventually turn to Amazon for groceries as well as they are inside Amazon ecosystem filled with many perks.

Walmart is taking up the fight with Walmart+ that brings together in-store and online benefits of doing shopping at Walmart for 98$ a year. The initial benefits include discounts for fuel, scan & go option in-store as well as deliveries for Walmart+ members of 160,000 items arriving as fast as the same day at no additional cost – as an addition to the retailer’s existing customer offering like Walmart’s free curbside pickup and two-day delivery.

To support its brand-new Walmart+ programme, the company rolled out a new ad campaign inspired by the its core value proposition – saving customers money… and time.

Instead of focusing and numerating all its perks, the spot promoting “Walmart+ – a different kind of membership” is about the benefits of all the free time that the customers can save with Walmart+ delivery.

Instead of showing how fast Walmart can provide them with groceries, it shows that they can relax and get things slow.

The campaign is based on Walmart’s research that the average family spends about 2,5 hours per week shopping. As stated by Walmart’s chief marketing officer William White, the question the company asked their customers – which sparked the idea for the campaign – was:

What do you want to do today? If we could give you back time, what would you do?” The most often answer was to spend that time on things that really mattered: family, friends and community.

This insight results in documentary-style campaign starring 22 families from across United States explaining how the early access to Walmart+ have changed their lives and make them spend more time on what matters to them: enabling them to spend more time with the loved ones – something that they have missed even more during the lockdown.

“Life feels more complicated than ever. Walmart+ is designed to make it easier – giving customers an option to not have to sacrifice on cost or convenience”. – William White added.

“We know shopping should fit customers’ needs, not the other way around. We have always been a champion for the right item at the right price, but now it’s more than that. We have the right shopping solutions at the right time, too.”

The campaign is the result of documenting the family’s lives and more than 100 hours of unscripted footage and 30 hours of audio interviews. “A different kind of membership” is company’s biggest advertising campaign this year spanning broadcast, digital, social, radio and experiential.

Why is it interesting? 

In 2020, during the outbreak and at the dawn of “contactless retail”, bolstering membership programmes à la Prime is the newest priority of Walmart who wants to go toe-to-toe against the giant from Seattle. The Walmart+ should help Walmart to continue its fast growth in e-commerce.

Walmart is leveraging its primary competitive asset of 4,700 stores as an alternative to Amazon’s juggernaut Prime program. But even though Walmart’s big advantage is the stores used as fulfilment centers for deliveries and pickups, the company is facing a tough comparison with Amazon Prime, who has 15 year head start with over 150 million subscribed users, much longer list of benefits (Amazon Prime Video for example) as well as million things that customers can order.

The success of Walmart+ will likely depend on how many customers will be attracted to the grocery fast delivery component. With the booming demand in the years to come, Walmart and Amazon as well as third giant Target, will fight to the bone for American online consumers. There is already a fiery ongoing battle between Amazon and Walmart regarding the lowest possible shipping time and cost to reach the consumer. Memberships programmes promising the fastest and most convenient delivery slots have become the battlefront in the ongoing competition for e-commerce supremacy.

To be continued.

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New Business:

Maxime Sabot maxime.sabot@havas.com

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