A year after Amazon bumped up the annual fee for its Prime membership from $79 to $99, Walmart is preparing to fire a broadside in the shipping wars by introducing a $50 option. The retailer told the Associated Press yesterday that the program—codenamed Tahoe—will be tested this summer with a promise of unlimited three-day delivery.
Walmart is no doubt preparing a rollout for Holiday 2015, when shipping options can make or break big retailers. Target got the Christmas fun started early in 2014 when, on October 22, it began offering free 3-5 day shipping for all orders on its website.
“It’s always about the holidays, when 40% of transactions for the year happen,” says Tom Caporaso, CEO of Clarus Marketing Group, which owns and operates FreeShipping.com. “From everything we hear about the Walmart program, it’s a test. It makes sense to do that in May, June, and July to see what people like and don’t like, and then launch when the holiday season begins.”
Caporaso sees Tahoe being aimed squarely at Walmart’s downscale, bargain-seeking clientele. It offers only free shipping, unlike Amazon Prime, which presents access to streaming videos, music, and a lending library. “If you look at some of the commercials for Prime, you’ll see that a mix of those features are promoted. The Walmart customer may be less interested in streaming video and more focused on saving money and getting products in a speedy way,” Caporaso observes.
A shipping club from the likes of Walmart will bring a new competitive dynamic to Holiday 2015, and perhaps beyond. “We know for a fact that when somebody raises their hand and pays for a shipping program, their average order value and total purchases all increase,” says Caporaso. “All of this can be driven through shipping.”
Caporaso’s Freeshipping.com carries a monthly subscription fee of around $12, but gives members access to 1,500 retailers, free returns, and 10% cash back on all purchases.