Walmart Just Made a Huge Announcement. Here’s the 1 Big Thing It Proves

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September 3, 2020

I’ve been curious, to put it lightly, what Walmart was waiting for — why it hadn’t launched its long-rumored Walmart+ subscription service, described as a way to compete with Amazon Prime.

The company was supposedly going to launch Walmart+ in March, although the pandemic impacted plans. But that was followed by comments from Walmart CEO C. Douglas McMillon last month that seemed to suggest Walmart might be delaying further.

But on Tuesday, Walmart finally made its announcement.

Walmart+ will be offered starting September 15 at $98 per year or $12.95 per month. Compare that to $119 per year for Amazon Prime, if you pay full price.

The initial package includes the following, with other add-ons promised down the road:

Unlimited free delivery, “as fast as same-day on more than 160,000 items from tech and toys to household essentials and groceries,” and for the same prices as in stores.
Scan & Go, offered within the Walmart app, that lets customers scan products as they shop and pay for them automatically — eliminating the need to wait in a checkout line.
Discounts on gas of “up to 5 cents a gallon” at Walmart, Murphy USA and Murphy Express fuel stations, plus Sam’s Club.

It’s interesting that there’s no video streaming component mentioned, given the emphasis Amazon Prime has put on video. Walmart sold its video streaming service Vudu last year, so one thing I’ll be looking for is any partnership or deal to add video.

Or, perhaps not, since Walmart customers I spoke with had described grocery delivery as the killer app, so to speak. Divide the $98 membership fee per year by 52 weeks, and if you normally shop at Walmart, you could spend less than $2 a week to have your regular grocery order delivered all year long.

(It’s worth noting that Walmart has made some moves toward subscription and delivery in the past, most notably with a service called Delivery Unlimited in some markets. Delivery Unlimited customers will automatically be converted to Walmart+.)

Now, I’ve been following this story for three main reasons:

The hybrid

First, because it’s seems so obviously the model of the future–a hybrid in-person and ecommerce model, with Amazon trying to expand its physical footprint and Walmart emphasizing ecommerce. However, I’ve been curious how Walmart thought it could launch without diminishing the value proposition of having nearly 5,000 stores across the United States.

As an example, Walmart EVP & Chief Customer Officer Janey Whiteside told Business Insider that Walmart+ members won’t get priority pickup time slots as one of their perks, because Walmart wants to hone the value proposition for Walmart+ while not disadvantaging other Walmart customers.

The competition

Second, because I think it’s going to be fascinating to watch Walmart go head to head with Amazon Prime on this, and I think smaller businesses will benefit at least in the medium-term. In short, Walmart and Amazon will have to try to outdo each other and attract suppliers and customers.

Prime has a 15 year head start on Walmart+, but Jeff Bezos once said the life-span of most big companies is “30-plus years,” and Amazon is heading toward that milestone.

The model

Finally, I think this announcement is the vindication of the “best ever business model” that I’ve long heard entrepreneurs and investors discuss. In short, if all other things are equal, subscription models win out.

During the early 2000s, when I was writing my book The Intelligent Entrepreneur about Harvard Business School, several Harvard professors shared with me some version of what they were calling a mythically perfect business model.

It went something like this:

There were low or no costs.
Customers simply sent you checks to a P.O. box every month.
Nobody really knew what to expect in return.

At the time, this was just just a thought exercise — maybe an unattainable standard against which to judge any new business idea.

But fast-forward a decade or so, and entrepreneurs and investors hold out subscription models as something that’s pretty close to this mythical ideal.

Consider that Amazon Prime, reportedly has 150 million members. Costco brought in $3.35 billion in membership fees last year.

And paying the membership fees just gets customers on board, guiding their buying choices with sunk costs, and developing habits.

It’s custom. It’s convenience. It’s “shopping as a service.”

It’s something that Walmart had to get into.

The only surprise, really, is that they waited so long. But now, it’s coming to a Walmart near you.

I've been curious, to put it lightly, what Walmart was waiting for -- why it hadn't launched its long-rumored Walmart+ subscription service, described as a way to compete with Amazon Prime.

n

The company was supposedly going to launch Walmart+ in March, although the pandemic impacted plans. But that was followed by comments from Walmart CEO C. Douglas McMillon last month that seemed to suggest Walmart might be delaying further.

n

But on Tuesday, Walmart finally made its announcement.

n

Walmart+ will be offered starting September 15 at $98 per year or $12.95 per month. Compare that to $119 per year for Amazon Prime, if you pay full price.

n

The initial package includes the following, with other add-ons promised down the road:

n

Unlimited free delivery, "as fast as same-day on more than 160,000 items from tech and toys to household essentials and groceries," and for the same prices as in stores.

t

Scan & Go, offered within the Walmart app, that lets customers scan products as they shop and pay for them automatically -- eliminating the need to wait in a checkout line.

t

Discounts on gas of "up to 5 cents a gallon" at Walmart, Murphy USA and Murphy Express fuel stations, plus Sam's Club.

n

It's interesting that there's no video streaming component mentioned, given the emphasis Amazon Prime has put on video. Walmart sold its video streaming service Vudu last year, so one thing I'll be looking for is any partnership or deal to add video.

n

Or, perhaps not, since Walmart customers I spoke with had described grocery delivery as the killer app, so to speak. Divide the $98 membership fee per year by 52 weeks, and if you normally shop at Walmart, you could spend less than $2 a week to have your regular grocery order delivered all year long.

n

(It's worth noting that Walmart has made some moves toward subscription and delivery in the past, most notably with a service called Delivery Unlimited in some markets. Delivery Unlimited customers will automatically be converted to Walmart+.)

n

Now, I've been following this story for three main reasons:

n

The hybrid

n

First, because it's seems so obviously the model of the future--a hybrid in-person and ecommerce model, with Amazon trying to expand its physical footprint and Walmart emphasizing ecommerce. However, I've been curious how Walmart thought it could launch without diminishing the value proposition of having nearly 5,000 stores across the United States.

n

As an example, Walmart EVP & Chief Customer Officer Janey Whiteside told Business Insider that Walmart+ members won't get priority pickup time slots as one of their perks, because Walmart wants to hone the value proposition for Walmart+ while not disadvantaging other Walmart customers.

n

The competition

n

Second, because I think it's going to be fascinating to watch Walmart go head to head with Amazon Prime on this, and I think smaller businesses will benefit at least in the medium-term. In short, Walmart and Amazon will have to try to outdo each other and attract suppliers and customers.

n

Prime has a 15 year head start on Walmart+, but Jeff Bezos once said the life-span of most big companies is "30-plus years," and Amazon is heading toward that milestone.

n

The model

n

Finally, I think this announcement is the vindication of the "best ever business model" that I've long heard entrepreneurs and investors discuss. In short, if all other things are equal, subscription models win out.

n

During the early 2000s, when I was writing my book The Intelligent Entrepreneur about Harvard Business School, several Harvard professors shared with me some version of what they were calling a mythically perfect business model.

n

It went something like this:

n

There were low or no costs.

t

Customers simply sent you checks to a P.O. box every month.

t

Nobody really knew what to expect in return.

n

At the time, this was just just a thought exercise -- maybe an unattainable standard against which to judge any new business idea.

n

But fast-forward a decade or so, and entrepreneurs and investors hold out subscription models as something that's pretty close to this mythical ideal.

n

Consider that Amazon Prime, reportedly has 150 million members. Costco brought in $3.35 billion in membership fees last year.

n

And paying the membership fees just gets customers on board, guiding their buying choices with sunk costs, and developing habits.

n

It's custom. It's convenience. It's "shopping as a service."

n

It's something that Walmart had to get into.

n

The only surprise, really, is that they waited so long. But now, it's coming to a Walmart near you.

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I've been curious, to put it lightly, what Walmart was waiting for -- why it hadn't launched its long-rumored Walmart+ subscription service, described as a way to compete with Amazon Prime.

n

The company was supposedly going to launch Walmart+ in March, although the pandemic impacted plans. But that was followed by comments from Walmart CEO C. Douglas McMillon last month that seemed to suggest Walmart might be delaying further.

n

But on Tuesday, Walmart finally made its announcement.

n

Walmart+ will be offered starting September 15 at $98 per year or $12.95 per month. Compare that to $119 per year for Amazon Prime, if you pay full price.

n

The initial package includes the following, with other add-ons promised down the road:

n

Unlimited free delivery, "as fast as same-day on more than 160,000 items from tech and toys to household essentials and groceries," and for the same prices as in stores.

t

Scan & Go, offered within the Walmart app, that lets customers scan products as they shop and pay for them automatically -- eliminating the need to wait in a checkout line.

t

Discounts on gas of "up to 5 cents a gallon" at Walmart, Murphy USA and Murphy Express fuel stations, plus Sam's Club.

n

It's interesting that there's no video streaming component mentioned, given the emphasis Amazon Prime has put on video. Walmart sold its video streaming service Vudu last year, so one thing I'll be looking for is any partnership or deal to add video.

n

Or, perhaps not, since Walmart customers I spoke with had described grocery delivery as the killer app, so to speak. Divide the $98 membership fee per year by 52 weeks, and if you normally shop at Walmart, you could spend less than $2 a week to have your regular grocery order delivered all year long.

n

(It's worth noting that Walmart has made some moves toward subscription and delivery in the past, most notably with a service called Delivery Unlimited in some markets. Delivery Unlimited customers will automatically be converted to Walmart+.)

n

Now, I've been following this story for three main reasons:

n

The hybrid

n

First, because it's seems so obviously the model of the future--a hybrid in-person and ecommerce model, with Amazon trying to expand its physical footprint and Walmart emphasizing ecommerce. However, I've been curious how Walmart thought it could launch without diminishing the value proposition of having nearly 5,000 stores across the United States.

n

As an example, Walmart EVP & Chief Customer Officer Janey Whiteside told Business Insider that Walmart+ members won't get priority pickup time slots as one of their perks, because Walmart wants to hone the value proposition for Walmart+ while not disadvantaging other Walmart customers.

n

The competition

n

Second, because I think it's going to be fascinating to watch Walmart go head to head with Amazon Prime on this, and I think smaller businesses will benefit at least in the medium-term. In short, Walmart and Amazon will have to try to outdo each other and attract suppliers and customers.

n

Prime has a 15 year head start on Walmart+, but Jeff Bezos once said the life-span of most big companies is "30-plus years," and Amazon is heading toward that milestone.

n

The model

n

Finally, I think this announcement is the vindication of the "best ever business model" that I've long heard entrepreneurs and investors discuss. In short, if all other things are equal, subscription models win out.

n

During the early 2000s, when I was writing my book The Intelligent Entrepreneur about Harvard Business School, several Harvard professors shared with me some version of what they were calling a mythically perfect business model.

n

It went something like this:

n

There were low or no costs.

t

Customers simply sent you checks to a P.O. box every month.

t

Nobody really knew what to expect in return.

n

At the time, this was just just a thought exercise -- maybe an unattainable standard against which to judge any new business idea.

n

But fast-forward a decade or so, and entrepreneurs and investors hold out subscription models as something that's pretty close to this mythical ideal.

n

Consider that Amazon Prime, reportedly has 150 million members. Costco brought in $3.35 billion in membership fees last year.

n

And paying the membership fees just gets customers on board, guiding their buying choices with sunk costs, and developing habits.

n

It's custom. It's convenience. It's "shopping as a service."

n

It's something that Walmart had to get into.

n

The only surprise, really, is that they waited so long. But now, it's coming to a Walmart near you.

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I've been curious, to put it lightly, what Walmart was waiting for -- why it hadn't launched its long-rumored Walmart+ subscription service, described as a way to compete with Amazon Prime.

n

The company was supposedly going to launch Walmart+ in March, although the pandemic impacted plans. But that was followed by comments from Walmart CEO C. Douglas McMillon last month that seemed to suggest Walmart might be delaying further.

n

But on Tuesday, Walmart finally made its announcement.

n

Walmart+ will be offered starting September 15 at $98 per year or $12.95 per month. Compare that to $119 per year for Amazon Prime, if you pay full price.

n

The initial package includes the following, with other add-ons promised down the road:

n

Unlimited free delivery, "as fast as same-day on more than 160,000 items from tech and toys to household essentials and groceries," and for the same prices as in stores.

t

Scan & Go, offered within the Walmart app, that lets customers scan products as they shop and pay for them automatically -- eliminating the need to wait in a checkout line.

t

Discounts on gas of "up to 5 cents a gallon" at Walmart, Murphy USA and Murphy Express fuel stations, plus Sam's Club.

n

It's interesting that there's no video streaming component mentioned, given the emphasis Amazon Prime has put on video. Walmart sold its video streaming service Vudu last year, so one thing I'll be looking for is any partnership or deal to add video.

n

Or, perhaps not, since Walmart customers I spoke with had described grocery delivery as the killer app, so to speak. Divide the $98 membership fee per year by 52 weeks, and if you normally shop at Walmart, you could spend less than $2 a week to have your regular grocery order delivered all year long.

n

(It's worth noting that Walmart has made some moves toward subscription and delivery in the past, most notably with a service called Delivery Unlimited in some markets. Delivery Unlimited customers will automatically be converted to Walmart+.)

n

Now, I've been following this story for three main reasons:

n

The hybrid

n

First, because it's seems so obviously the model of the future--a hybrid in-person and ecommerce model, with Amazon trying to expand its physical footprint and Walmart emphasizing ecommerce. However, I've been curious how Walmart thought it could launch without diminishing the value proposition of having nearly 5,000 stores across the United States.

n

As an example, Walmart EVP & Chief Customer Officer Janey Whiteside told Business Insider that Walmart+ members won't get priority pickup time slots as one of their perks, because Walmart wants to hone the value proposition for Walmart+ while not disadvantaging other Walmart customers.

n

The competition

n

Second, because I think it's going to be fascinating to watch Walmart go head to head with Amazon Prime on this, and I think smaller businesses will benefit at least in the medium-term. In short, Walmart and Amazon will have to try to outdo each other and attract suppliers and customers.

n

Prime has a 15 year head start on Walmart+, but Jeff Bezos once said the life-span of most big companies is "30-plus years," and Amazon is heading toward that milestone.

n

The model

n

Finally, I think this announcement is the vindication of the "best ever business model" that I've long heard entrepreneurs and investors discuss. In short, if all other things are equal, subscription models win out.

n

During the early 2000s, when I was writing my book The Intelligent Entrepreneur about Harvard Business School, several Harvard professors shared with me some version of what they were calling a mythically perfect business model.

n

It went something like this:

n

There were low or no costs.

t

Customers simply sent you checks to a P.O. box every month.

t

Nobody really knew what to expect in return.

n

At the time, this was just just a thought exercise -- maybe an unattainable standard against which to judge any new business idea.

n

But fast-forward a decade or so, and entrepreneurs and investors hold out subscription models as something that's pretty close to this mythical ideal.

n

Consider that Amazon Prime, reportedly has 150 million members. Costco brought in $3.35 billion in membership fees last year.

n

And paying the membership fees just gets customers on board, guiding their buying choices with sunk costs, and developing habits.

n

It's custom. It's convenience. It's "shopping as a service."

n

It's something that Walmart had to get into.

n

The only surprise, really, is that they waited so long. But now, it's coming to a Walmart near you.

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