Walmart recently announced that it plans to test a new shipping service designed to challenge Amazon Prime. With an annual fee of only $50, the new service would grant subscribes with free delivery in three days.
The world’s largest retailer also said that its service would be based on an invitation only and rolled out this summer over a limited geographical area. However, the retailer hasn’t disclosed a name for the new service. We only know for sure that only a limited amount of the products displayed on-line would receive free shipping.
The company announced that about 1 million of the products would carry a free-shipping tag to be easily identified by on-line shoppers. On its website, Walmart has more than 7 million items for sale.
However, the big-box retailer declined to commit to deliver the service to a wider base of customers. It seems that the current beta test is only designed to analyze the market so terms of service may drastically change after an official rollout.
Walmart has conducted many other tests in the recent years, of which many didn’t turn out quite popular. Currently, the retailer still experiments with home delivery services especially for grocery products.
But by looking at Amazon Prime, it is crystal clear what customers want. They want the delivery fast and free. So, Walmart needs only to test if the $50 fee is appealing enough to its on-line customers.
Also, the company probably wants to learn whether customers would wait one more day for their products to be delivered at their doorstep for half the price. We know that Amazon Prime charges $99 per year for a two-day delivery. Also, there are a lot of “same-day” services that currently try to challenge Amazon’s delivery offer, as well.
A Walmart spokesperson noted that his company’s clients want a “predictable” but also “affordable” delivery service.
“[This test is] really to understand is this yet another new way that we can serve customers,”
the spokesperson added.
But two yeas ago, a comScore’s survey clearly showed that more than 90 percent of customers agreed to wait more than 3 days to get their product if it came with free shipping. Additionally, if there was no free delivery offer, most of these customers picked the cheapest shipping option on the menu, while only 1 percent of the time they went for a premium service.
On the other hand, competing with Amazon Prime only on the cost of service may not be too clever since Amazon Prime members also benefit from free music, video, e-books and discounts.
Image Source: Retail Solutions On-line
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