If Walmart.com is ever going to put a dent in Amazon’s dominance, this will have to be the starting point.
Walmart is going after Amazon Prime with free two-day shipping and no membership fee
The only catch is a $35 order minimum.
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
The world’s largest brick-and-mortar retailer is eliminating the membership fee on its own two-day shipping program, and simultaneously lowering its free shipping order minimum from $50 to $35. More than two million items will be available for the new, free express delivery service.
Marc Lore, CEO of Walmart’s U.S. e-commerce division, said in a statement that “in today’s world of e-commerce, two-day free shipping is table stakes.” At the same time, he called the initiative “the first of many moves we will be making to enhance the customer experience and accelerate growth.”
Walmart is facing an uphill battle. By some estimates, Amazon accounts for almost a third of all e-commerce sales in the U.S. and half of the industry’s growth.
Its Prime membership program, which costs $99 a year, is the fuel. Members get two-day shipping on tens of millions of products, as well as a growing list of other perks like video and music streaming and photo storage. Amazon in some cases makes Prime-eligible products available for same-day or next-day delivery at no extra charge, too.
Amazon doesn’t disclose exact Prime membership numbers, but some analysts estimate, at the high end, that nearly half of all U.S. households have a Prime membership. The company has been expanding the ways customers can pay for Prime in a bid for lower-income households that could threaten Walmart even more.
So Walmart is responding with a value proposition that it hopes will convince those who haven’t converted into Prime members that they can get the same two-day shipping speed for free. Tens of millions of households are up for grabs.
At the same time, it will be hard to convince existing Prime members to ditch their no-order-minimum shipping program for Walmart’s, which comes with a $35 threshold. That $35 minimum is the same as the one at Jet.com, Lore’s shopping site that Walmart bought last year for $3 billion.
With the move, Walmart is discontinuing ShippingPass, its $49-a-year two-day shipping membership, which just launched widely this past summer. Members will be refunded the $49 fee.
Walmart’s two-day shipping product selection will be heavily focused on consumable products. This is the type of stuff you might need delivered quickly, like packaged foods, toothpaste, deodorant, diapers and shampoo. Top-selling toys and electronics will be among the other types of items available for the express delivery service.
This article originally appeared on Recode.net.
