Walmart takes on Amazon Prime with cheap subscription service, gas deals

Walmart hopes free unlimited deliveries and fuel discounts will lure Prime users over to the other side.

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Walmart has launched its long-awaited subscription delivery service in another bid to compete against the growing dominance of Amazon Prime. 

On Monday, the US retail giant said Walmart+ will cost members $98 per year, undercutting Amazon's annual fee of $119 for Prime. 

Launching September 15, Walmart+ has taken over the subscription-based Delivery Unlimited service, in which current subscribers will be converted automatically to Walmart+ members. 

Instead of paying annual or monthly fees for delivery, Walmart+ will now offer free delivery for over 160,000 items -- but not Walmart's entire range. 

In some locations, same-day delivery services will be made available. 

Walmart is also competing against Amazon's Go technology through "Scan & Go" -- a barcode scanner in the Walmart app which will allow for touchless payments after customers have finished up their shop. 

Amazon's Go system is similar as both remove the need for checkout lines, and in a time where contactless payment and social distancing is suggested to combat COVID-19, the feature may be an attractive one to consumers. 

In the same way that consumers interested in Amazon Prime can try out the service on a trial basis, Walmart, too, is offering a 15-day trial period. A $12.95 per month or per-order delivery fee option is available. 

Shoppers in the US may be further tempted by fuel discounts bundled with Walmart+. Walmart is offering "up to five cents a gallon" at close to 2,000 Walmart, Murphy USA, and Murphy Express fuel stations, with the promise that Sam's Club will join the scheme in the future. 

See also: Walmart Q1 e-commerce sales surge 74% as company shuts down Jet.com, acquired for $3.3b in 2016

Walmart's announcement emphasizes that subscription benefits "will continue to grow over time," suggesting that the company intends for Walmart+ to eventually become a serious competitor to Amazon Prime.

However, free shipping stipulates an order of at least $35, as noted by the New York Times. Therefore, it is unlikely to tap into the sub-market of consumers that use Prime for odd items here and there; instead, it may be more likely to appeal to bulk buyers or SMBs.

For some analysts anticipating the launch, a combined $35 minimum order and $98 annual fee are disappointing. Customer Growth Partners president Craig Johnson told the publication that the offering is a "thin gruel," and as such, additional benefits could become crucial to lure Prime users over to an alternative subscription service. 

To Janey Whiteside, Walmart chief customer officer, however, Walmart+ is a "life hack" to make shopping more convenient for US consumers. 

"We know shopping should fit customers' needs, not the other way around," Whiteside commented. "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."

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