After years of struggling to translate its brick-and-mortar success to the digital world, Wal-Mart (NYSE:WMT) spent $3.3 billion last year to acquire e-commerce start-up Jet.com as well as the services of its founder and CEO, Marc Lore, a serial e-commerce entrepreneur who founded Quidsi, the Diapers.com parent Amazon (NASDAQ:AMZN) paid $545 million for six years ago. Lore was immediately put in charge of Walmart.com, which he is running along with Jet.com. It was a bold move by the retailer, a sort of self-disruption designed to inject start-up thinking into a mature brand.
Lore acted quickly and decisively to counteract Amazon's major lead. His biggest move was to eliminate Wal-Mart's $50-a-year answer to Amazon Prime, ShippingPass. Instead of charging customers an annual fee for free two-day shipping -- something Prime members pay $99 a year for -- Wal-Mart's new digital boss made two-day shipping free with any qualifying order over $35.
That was a short-term profits-be-damned move that a start-up would make when taking on a giant. It was a direct shot at Amazon, an attempt to woo both uncommitted customers and the estimated 65 million Prime members in the United States, who are estimated to spend an average of $1,200 a year on Amazon.com.
It's easy to see why Wal-Mart wants to win over Prime members, but after a month of giving Walmart.com a chance, I'm pretty sure it's not going to work.
A month with Walmart.com
I have been a Prime member for many years, close to as long as the program has been offered. I don't order from Amazon every day, but certainly a few times a week, and sometimes more than once in a single day if a need pops up. I started buying physical books and CDs from the retailer, and now buy everything from electronics to food, kitty litter, tea, various household supplies, and much more.
It's important to point out that Amazon does not share data on how often Prime members order, but the company has made it very easy to place single-item orders that total less than $35. You can, for example, reorder your dish-washing liquid using an internet-connected Dash button that you can place near your sink. You can also order through the Alexa voice assistant and place single-click orders on your phone, or through a computer.
It's a system that encourages buying what you need when you need it and that's where my experiment using WalMart.com hit some major snags. My first order of the month was an attempt to find a jar of smooth spaghetti sauce, as my 13-year-old son does not like tomato chunks in his sauce. Wal-Mart stocked the brand I wanted, but the item was under $10, so I placed the order on Amazon.
That pattern repeated throughout the month. I needed earbuds, sticky notes, a tote bag for the beach, and various other things, but never all at once, and never in a quantity that totaled $35.
In most cases, I did find the item I wanted, or a comparable one, on WalMart.com. That actually surprised me because Amazon has "over 50 million eligible items," according to its web page while Wal-Mart's free two-day shipping offer only covers "more than two million items," the company said in a press release. Still, a good selection did not matter when hitting the $35 threshold would have required planning, waiting, or buying things I don't need.
Prime is still the king
Amazon has trained me, and I would assume tens of millions of other Prime members, that we can have pretty much whatever we want in two days no matter how small the order is. Having to attempt to hold off on ordering, or pad my order to get to $35 was a complication that for me makes the $99 Prime cost worth it.
There's nothing wrong with Wal-Mart's website or app. Both rival Amazon for ease-of use. The one order I did place with the company, which I padded with a video game to reach the $35 threshold, came in two days as promised (albeit in three separate boxes) and was no more difficult to place than a Prime order.
Offering free two-day shipping on orders over $35 compared to Amazon's Free 5-to-8-day shipping on orders over $25 will win Wal-Mart some customers. Those shoppers, however, will largely come from digital consumers not yet loyal to Amazon, people who only shop online occasionally, and cheapskates willing to put up with inconvenience to save a buck. It's not that Wal-Mart's deal is not attractive, it's simply that in my experience, getting to $35 in order to trigger the free shipping proved much harder than expected
Consider this a first move from Lore who appears to have the full backing of Wal-Mart CEO Doug McMillon. Free shipping on orders over $35 should measurably move the needle for the company, just not at Amazon's expense.