Dive Brief:
- Walmart is offering customers a way to combine a Walmart+ and Sam’s Club Plus membership, another challenge to Amazon Prime from the retail giant.
- As of Tuesday, customers can buy the two memberships for $120 a year, which trims nearly $100 for those who sign up for both separately.
- Benefits include members-only prices on some items and 2% “Sam’s Cash” at Sam’s Club; free delivery from both retailers; a subscription to the Peacock or Paramount+ streaming service; and savings of 10 cents per gallon of gas at over 17,000 stations.
Dive Insight:
This deal from Walmart comes at a time when consumers are battered by rising prices and increasingly worried about jobs — and serves as the latest challenge to Amazon.
“This is a direct shot at Prime,” Brett Rose, founder and CEO at wholesale distributor United National Consumer Suppliers, said by email. “$120 vs. [Amazon Prime’s] $139, and you get a warehouse club, delivery, streaming, and gas thrown in. On paper Walmart wins the value math easily.”
Amazon has pushed into Walmart’s territory by expanding faster delivery to rural America, which has meant building up its fulfillment capacity in those areas of the country. Walmart appears to be answering back in a number of ways.
Walmart already has a massive advantage in its physical presence, and this combination only enhances that. In the U.S. alone, the company runs 4,615 Walmart stores and over 600 Sam’s Clubs. By including a streaming service option, the membership tie-up also undermines the attractiveness of a key Amazon Prime perk.
Walmart has recently picked up sales and loyalty from wealthier customers, and the dual membership could help lock them in. Noting that more higher-income cohorts have become Walmart shoppers, Moody’s Ratings earlier this year picked the retailer as the biggest winner in the U.S., thanks to its “innovation supporting its value offering and best-in-class convenience.”
That doesn’t mean that people will switch away from Prime, though, as people shop at the two retailers differently — at Walmart for low prices and getting goods immediately, and Amazon for convenience and out of habit, according to Rose.
“A cheaper bundle doesn’t break that overnight and doesn’t create an imminent threat for Q4 holiday shopping,” Rose said. “Amazon has mastered lower prices and literally patented one-click buying. It’s a different shopping experience altogether.”
At a time when gas prices seem stuck well above $4 per gallon in most of the U.S., and more for diesel, the fuel discount is also a draw, though. This Walmart+ perk has long been viewed as a challenge to Sam’s Club rival Costco. Amazon has little answer to that benefit, though the company offered a fuel discount program to Prime members for the Fourth of July this year.
“The timing tells you everything. Consumers are stretched heading into the holidays, and memberships lock in loyalty and recurring revenue before the spending gets decided,” Rose said. “Loyalty programs are what keep people coming back. However, not more so than lower prices.”
