Multinational retailing corporation Wal-Mart has decided to pull the plug on its ShippingPass program, a fee-based, two-day shipping program that was undergoing the test phase to compete with Amazon’s Prime.
Touted as a possible competitor to Amazon Prime, the world’s largest retailer has decided to bring about a change of approach. Wal-Mart is now going to bring down the free shipping threshold from $50 to $35 instead of going ahead with its membership program. That’s not all. The shipping is faster with a 2-day delivery window on roughly 2 million products for $35 as against the 3-5 days taken to ship for $50.
The members, whose numbers are undisclosed, who paid for the ShippingPass program will be entitled to a full refund.
Marc Lore, the former co-founder, chairman and CEO of Jet.com, which was acquired by Wal-Mart last year, sounded upbeat about the first major change under his guidance.
“In this day and age, two-day shipping is really just table stakes,” said Lore, now the president-cum-CEO of Wal-Mart U.S. eCommerce, on Monday. “We don’t think it’s necessary to charge a membership [fee] for it.”
The program, which started testing in May 2015, had been launched with the aim of countering Amazon’s Prime ahead of the latter’s second Prime Day sales event, in which it offered a 30-day trial. However, the program never really took off despite offering an unlimited number of free deliveries for just $49 a year, which was $50 less than Prime’s annual fee of $99. It lacked the whole gamut of perks that Prime had on offer like music and video streaming or unlimited cloud-based photo storage.
Prime also had members-only deals, along with a recently-introduced credit card that gives Prime members a 5-percent cashback on their Amazon purchases. If Kantar Retail is to be believed, almost one-third of Wal-Mart shoppers are Prime members. With a renewal rate of 90 percent for its 50 million members in the U.S., Prime had been miles ahead of ShippingPass, which was one of the major reasons why the ambitious program was nipped in the bud.
The Bentonville-based retailer also seems to be lagging behind in terms of the number of products on offer under the program. While Wal-Mart’s offer will be applicable to 2 million items, Prime covers over 40 million products –a whopping twenty times more than its competitor. Lore, however, doesn’t seem deterred by that.
“There won’t be too many products that you’ll want that won’t be available [for] two-day shipping,” Lore said. He went on to add that the items will mainly be everyday essentials like pet food and cleaning supplies.
Company spokeswoman Danit Marquardt highlighted the scale of Wal-Mart’s distribution network as its strength, which, she said, “allows it to create efficiencies that it can then pass along to the consumer through lower prices and shipping costs”.
Wal-Mart’s $500 billion in sales is still almost 5 times greater than Amazon’s 110-billion. However, Amazon members tend to be more loyal after signing up to Prime and spend twice as much as non-members.