Wal-Mart Stores Inc. is attempting to throw some cold water on Amazon’s big Prime Day, coming up Wednesday, in which Amazon promised more deals on its site than Black Friday for Prime members.
Wal-Mart will also launch a sale on Wednesday, with more than 2,000 online exclusive deals, or "rollbacks," that will last 90 days. In a blog post Monday, Wal-Mart's online chief, Fernando Madeira, slammed the idea of having to pay for Prime to get the deals offered during Prime Day, saying, “We’ve heard some retailers are charging $100 to get access to a sale. But the idea of asking customers to pay extra in order to save money just doesn’t add up for us.”
Amazon hit back, with Prime VP Greg Greeley releasing a statement saying, “We’ve heard some retailers are charging higher prices for items in their physical stores than they do for the same items online. The idea of charging your in-store customers more than your online customers doesn’t add up for us, but it’s a good reminder that you’re usually better off shopping online.”
Well, this is an ugly tit-for-tat, but Wal-Mart may not get much out of it. For one thing, Prime members get a lot more from Amazon than lower prices on Prime Day — an entertainment streaming service that rivals Netflix, a music streaming service, photo storage, and free two-day shipping. And consumers, especially younger ones, actually really like those paid memberships. Some may even ask: what is Wal-Mart's Sam's Club if not a membership-based retailer where customers must "pay extra in order to save money"?
Wal-Mart says it’s lowering its free shipping minimum to $35 from $50, and cutting prices on thousands of items for the promotion. But seasoned Prime members know that on many products they don’t need a minimum at all, even for that speedy shipping Amazon provides.
And Amazon's Greeley may have a point: Wal-Mart has struggled to maintain price consistency in its stores vs online, and for a while wouldn't price-match its own site. That meant that, until recently, Wal-Mart employees would send in-store customers home to order from the web if they wanted the lower price.
One of Wal-Mart's main obstacles in this competition could be that Amazon has shown that it’s willing to forgo profits to win any competition — something that Wal-Mart may not be so keen on. The retailer is looking high and low for ways to cut costs as it raises worker pay, including putting pressure on suppliers, dampening executive compensation, and now reportedly instigating more layoffs — according to the City Wire, Wal-Mart is planning to lay off some 1,000 Wal-Mart and Sam's Club employees at its Bentonville, AR headquarters, on top of the 50 positions eliminated there earlier this year.
In general, it’s a little risky to rain on someone’s parade, though Wal-Mart probably thinks it couldn’t let this one go without making some noise. A bigger question for Wal-Mart (maybe less so for Amazon, but for Amazon as well) is: Will the price competition continue after Prime Day?