Amazon (NASDAQ:AMZN) customers pay $119 per year or $12.99 a month for Prime, which gives them unlimited free one- or two-day shipping on over 100 million items. It's an offer that has helped the online retailer become a dominant force -- but it also requires people to pay for something that Walmart (NYSE:WMT) now offers (a version of) for free.
Walmart's shipping offer is not the same as Prime. It only covers a few million items, and customers have to place a qualifying order of over $35. The chain also only offers mostly two-day shipping with a smaller selection of items available next day in some markets, while Amazon has moved many of its orders to one-day.
Still, free beats $119 per year, at least for many consumers. Does it make sense to drop Amazon Prime and start using Walmart? The answer may be yes, but it depends on how you shop.
Should you drop Prime?
If you're an Amazon Prime member, you pay a premium so you can order as often as you want. You can buy pretty much anything on a whim, not having to consider the value of what you're buying, and almost never having to pick a substitute for what you actually want.
Becoming a Walmart customer saves you $119 a year. In exchange for that, you have to become a shopper who plans more. Instead of being able to order as you go, you have to wait to place your order until you hit the minimum.
If you tend to place larger orders or buy more expensive items, this may not be a problem at all. If you regularly exceed the $35 threshold, using Walmart might make sense.
Another issue, however, is selection. Walmart has tried to build its much smaller offering around the items people order most often. For some people, that's not an issue because they're reasonably flexible when it comes to brands, package size, and exactly what they're ordering.
For others, the difference between a few million items and over 100 million is a deal-breaker. Walmart has some version of most things you want to order, but it does not have Amazon's nearly endless selection.
You pay for convenience
Joining Prime allows you to shop without thinking. Opting for Walmart instead requires more planning.
Picking the free choice is also easier if you're willing to sometimes pick up your own order at brick-and-mortar Walmart stores. The chain offers curbside pickup, and has automated kiosks you can use in-store to get your order without having to speak to actual people.
Amazon has built a near-perfect shopping system: Consumers can get nearly anything they want in a day or two. That's something that many people are willing to pay for.
Walmart has built a decent, free alternative for consumers who are not willing to pay for shipping, even all-you-can-use, no-limits shipping like Amazon offers. Using the traditional brick-and-mortar chain's free offer should work if you're flexible about what you buy.
The much smaller selection means you won't always get what you want. If you can live with that, then it makes sense to opt for "free" over "$119 per year."