A Blog by Jonathan Low

 

Nov 16, 2020

The Reason 1 In 5 Amazon Prime Members Consider Moving To Walmart+

The familiarity of Walmart's army of in-store shoppers is seeding the growth of its ecommerce membership club, Walmart+. This will invariably cannibalize some of Amazon's Prime members. JL

Lance Lambert reports in Fortune:

Among U.S. adults, 21% say they’re likely to subscribe to Walmart+, while 19% of Amazon Prime subscribers say they’re likely to sign-up for Walmart’s offering. The more often Americans shop in-store at Walmart, the more likely they are to sign up for Walmart+. Among U.S. adults who shop at Walmart every week, 42% have either subscribed to Walmart+ (7%) or are likely to (35%). If Walmart can continue to convert these frequent in-store shoppers into subscribers, it could grow a user base well into the tens of millions.

In September Walmart debuted its $98 annual subscription service that offers unlimited same-day delivery and discounts at gas stations. The service, called Walmart+, is a direct competitor to Amazon Prime, which cost $119 per year.

Fortune and SurveyMonkey conducted a poll in July prior to the Walmart+ launch and found 27% of Americans were likely to subscribe.

But are those subscribers starting to materialize? To find out, Fortune and SurveyMonkey polled 2,098 U.S. adults between November 9 and 10.*

In the months since it launched, 3% of U.S. households have signed up for Walmart+. So it’s still far off before it can seriously threaten Amazon Prime, which has subscribers in 66% of U.S. households.

But more sign-ups are on the way. Among U.S. adults, 21% say they’re likely to subscribe to Walmart+, while 19% of Amazon Prime subscribers say they’re likely to sign-up for Walmart’s offering. That could cost Prime memberships. After-all why would someone pay for two free shipping services?

The Fortune-SurveyMonkey poll finds that the more often Americans shop in-store at Walmart, the more likely they are to sign up for Walmart+. Among U.S. adults who shop at Walmart every week, 42% have either subscribed to Walmart+ (7%) or are likely to (35%). If Walmart can continue to convert these frequent in-store shoppers into subscribers, it could grow a user base well into the tens of millions. 

Walmart has poured billions into building its global e-commerce business: From its $3.3 billion purchase of Jet.com in 2016 to acquiring a stake in Indian e-commerce giant Flipkart for $16 billion in 2018. And those investments—especially in the U.S.—are starting to pay dividends. Since the start of the pandemic, 41% of U.S. adults say they’ve ordered online from Walmart. Only Amazon, at 79%, has more Americans ordering from it during the crisis.

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In the U.S. alone, online sales netted Walmart and Sam’s Club stores $20.1 billion through the first six months of 2020. That’s up 70% from the same period a year prior. International Walmart sales climbed 22% to $6.2 billion during the same period. And while it’s too soon to tell whether converting in-person shoppers into Walmart+ subscribers will undercut the company’s in-store sales, the boom in e-commerce has certainly translated into wealthier Walmart shareholders. Shares of Walmart (WMT) traded at $148.18 at the close of trading Thursday, a gain of 24.6% year-to-date.

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