Walmart Tests 2-Day Subscription Shipping

...


ManageEngine OpManager, a powerful NMS for monitoring your network, physical & virtual (VMware/ HyperV) servers & other IT devices. Deploy and start monitoring in less than an hour. Trusted by over a million admins world-wide. Try it for free.

Walmart on Thursday began testing a two-day unlimited shipping service priced at US$49 a year.

Subscribers will get more than a million items, including the most commonly purchased items on Walmart.com, delivered to their door in two days or fewer, Walmart spokesperson Bao Nguyen said.

"Customers will continue to enjoy their two favorite features -- no minimum order requirements and free returns online and in stores," he told the E-Commerce Times.

The service, called "ShippingPass," launched last year as a three-day shipping pilot program with a $50 annual subscription fee.

Consumer reaction to the three-day ShippingPass pilot likely was not been favorable "because Amazon has already trained consumers to expect to receive many goods in two days or less," said Larry Chiagouris, professor of marketing at Pace University.

Walmart already offers free value shipping on orders of $50 or more. "We will continue to offer free shipping on orders of $50 or more," Bao said.

There is no minimum order or minimum distance requirement for ShippingPass.

Amazon, Walmart's prime target, has warehouses and drop centers throughout the United States and can leverage economies of scale because it's so large, getting better prices for shipping and products.

However, "it's not just about scale; it's about efficiency," said Nikki Baird, managing partner at RSR Research.

"That's one place where Walmart has the advantage," she told the E-Commerce Times. Amazon "has a much more difficult inventory optimization than Walmart, because Walmart can always tap into store inventory and can always balance inventory choices against both online and walk-in demand."

The problem comes down to splits, Baird said. Amazon often ships orders as split line items, even those that are add-on only, and "as soon as you have to ship from multiple locations, it doesn't matter how much you can negotiate the shipping fee. ... It's two boxes and two sets of hands on those boxes."

Amazon is well ahead of Walmart in drone delivery, having tested drones in the UK, Canada and the Netherlands and having just acquired a team of top European computer vision experts.

In contrast, Walmart applied in October to test drones for home delivery and pickup.

"We can offer faster and more affordable shipping because we have a unique fulfillment network that includes new large-scale fulfillment centers, stores, distribution centers and our transportation network," attested Walmart's Nguyen.

"Logistics is the weapon that will decide who wins and who loses," Pace's Chiagouris told the E-Commerce Times. "Walmart is quite sophisticated in using logistics to its advantage."

If Walmart can use "its legendary supply chain efficiency to do something [like Amazon Prime] but actually make money at it, then, yeah, I think they can take on Amazon," Baird surmised.

On the other hand, "saying you want to deliver to the home is one thing; executing it is another," Guy Courtin, VP and principal analyst at Constellation Research.

"Amazon has been constantly building the necessary infrastructure -- distribution centers, logistics and IT systems -- to handle this," he told the E-Commerce Times.

Walmart can differentiate itself from Amazon because it "offers some goods that are not offered by Amazon, including many perishable food products, and needs to leverage these to its advantage," Chiagouris suggested.

Further, it can offer customers the option of returning products to the store, which Amazon can't, Baird said.

Subscribers to ShippingPass can cancel at any time. That, along with its lack of minimum order requirements and shipping distance, raises the question of whether the program will be profitable.

"Walmart is betting that many consumers will see this as a catalyst to buy more merchandise, so it will make up the revenue on increases sales to existing customers and possibly" new ones, Chiagouris suggested.

"We're able to offer free two-day shipping for $49 as a result of enhancements we've continued to make to our e-commerce fulfillment network," Bao said.

It's not clear whether Amazon makes money off its Prime members, Baird noted. "I'm guessing Walmart did the math to figure out how to offset" shipping costs.

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

Categories
Guide
0 Comment

Leave a Reply

Captcha image


RELATED BY

  • 5300c769af79e

    As News Feed Turns 10, Facebook Tests Condensed Version

    The small collection of posts from friends seems to highlight the number of comments a post has received: a sort of condensed News Feed that offers more opportunities to remark with less scrolling.But as Mashable points out, the social network often tests new functions with small groups of users, and not all come to fruition.
  • 5300c769af79e

    10 Strategic Tech Trends For 2017: Gartner

    Thousands of IT and business executives gathered in Orlando last week for this year's Gartner Symposium ITxpo.These are the big, broad trends Gartner thinks executives should keep in mind as they're making plans and building business strategies for the coming years.
  • 5300c769af79e

    Medium raises $50 million while it can, adds Ben Horowitz and Judy Estrin to board

    ” Existing investor Andreessen Horowitz returned to put in a “significant amount”, as did GV (formerly Google Ventures), and Medium chief executive Ev Williams.The firm was a major investor in his previous company Twitter and the lead partner in today’s round Kevin Thau was a former coworker.
  • 5300c769af79e

    Changes in Federal IT Spending Require Nimble Contracting

    The funding level applies to what Deltek calls the "addressable" IT contract market, comprised of 58 federal agencies including intelligence units, the U.The federal IT budget as calculated by the Office of Management and Budget covers just 26 agencies, mainly cabinet departments.