Walmart Challenges Amazon Prime With Unlimited Shipping For $50: But Will Economically Struggling Customers Care?

Walmart and Amazon are becoming the world's dominant retailers, which means they are competing for every advantage. Amazon Prime generates fees and locks customers into their network. Walmart is now offering a similar service - for half the price.

That could be a devastating advantage - but its not clear that Walmart's core customer cares - or can afford it even if they do. JL

George Anderson reports in Forbes:

When you are used to routinely spending $50 or more on dinner  it’s easy to forget that there are lots of Americans trying to feed a family of four for a week on that same $50. For lots of Walmart customers, that’s a lot of money to invest in an intangible future service.
If you can’t beat ‘em, lower the price — that’s the Walmart way. Currently, the retailer appears to have Amazon’s $99-per-year Prime program in its sights with the test of an unlimited shipping service carrying a mere $50 annual fee.
Unlike the Prime program, which offers guaranteed two-day delivery on purchases, Walmart’s offer will guarantee delivery within three days or less. An initial test, codenamed Tahoe, according to a report by The Information, will be offered to select customers by invitation only.
While Amazon Prime include program elements such as free Kindle books and streaming videos, the Walmart test will be strictly limited to the shipping offer, at least initially. Walmart may choose to add other options such as its Vudu streaming video service.
In an online discussion Thursday, few of the BrainTrust of industry insiders at RetailWire were sold on the idea that Walmart could out-deliver Amazon Prime, even at a lower price.
“Amazon’s Prime program offers a lot of comprehensive benefits that Walmart will not be able to offer anytime soon,” said David Biernbaum, senior marketing and business development consultant at David Biernbaum Associates. “[Tahoe] will carry only what Walmart carries, and believe it or not, that selection is fairly limited to mostly commodities, basics and every day pantry items.”

“Walmart once again finds itself playing catch-up in the digital world and resorts to a time-tested technique, cutting prices,” said Max Goldberg of Max Goldberg and Associates. “Yes, the new Walmart offer will spur some sign-ups, but it will not threaten Amazon’s digital dominance.”
“I think Walmart customers might bite, but there is nothing about this program that would make someone like me switch,” said Paula Rosenblum, managing partner at RSR Research. “On the most basic level, their assortment isn’t as broad. Then there are all [Amazon Prime’s] extras … and Prime Now, which I don’t use often, but really comes in handy once in a while. Walmart may roll it out, but I don’t see huge uptick.”
Some did, however, see potential for Walmart to compete in certain areas with the program.
“if Walmart can deliver on its promise in three days with their low prices on staples and HBA [health and beauty aids], they will cut into Amazon on those products as they have the lowest prices for these items,” said Tony Orlando, owner of Tony O’s Supermarket and Catering. “Other than that, Amazon can up the ante anytime they want as well and let the consumer enjoy the battle of the giants, which will give them more ways to save.”
One BrainTrust member noted that more goes into calculating price competitiveness than one might assume when it comes to subscriptions.
“When you are used to routinely spending $50 or more on dinner (or maybe even lunch) it’s sometimes too easy to forget that there are lots of Americans out there trying to feed a family of three or four for a week on that same $50,” said Ryan Mathews, CEO of Black Monk Consulting. “For lots of Walmart customers, that’s a lot of money to invest in an intangible future service.”
“How many Walmart customers fit in that category? I guess we’ll all find out soon,” said Mr. Mathews.