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Why Walmart Stock Jumped Today

By Joe Tenebruso - Updated Sep 1, 2020 at 6:33PM

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The retail titan is about to go head-to-head with Amazon Prime.

What happened

Shares of Walmart (WMT -0.77%) climbed 6.3% on Tuesday after the retail giant said its new membership service, which is designed to challenge Amazon (AMZN -2.48%) Prime, will go live later this month.

So what

Walmart+, as the new service will be called, will combine online and in-store benefits, including free delivery, fuel discounts, and other features geared toward saving its customers time and money. 

"Life feels more complicated than ever," Walmart's chief customer officer Janey Whiteside said in a press release. "Walmart+ is designed to make it easier -- giving customers an option to not have to sacrifice on cost or convenience."

A man is a business suit is wearing boxing gloves.

Walmart is launching a major new offensive against Amazon. Image source: Getty Images.

Notably, Walmart+ members will be able to use the Scan & Go feature in Walmart's app to scan items in the retailer's stores and pay for them using its touch-free payment solution, Walmart Pay. The service could prove popular among people seeking to limit contact with others during the COVID-19 crisis.

Walmart+ will cost $12.95 per month or $98 per year. That compares favorably to Amazon Prime, which costs $12.99 per month or $119 per year.

Now what

Prime members tend to spend more on Amazon's sites than its other customers, and the membership program is considered to be a major part of the e-commerce juggernaut's dominance in the online retail arena. Once customers pay for Prime, they have an incentive to maximize the value of their membership fees by shopping as much as they can on Amazon's sites. Walmart is hoping that a similar dynamic plays out for Walmart+.

The membership service is set to launch on Sept. 15.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$138.00 (-0.77%) $-1.07
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$138.77 (-2.48%) $-3.53

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