Amazon has gone with a membership model in its test markets, called Amazon Prime Fresh, which will cost prospective members $299 for a year of the service. The hope is that the high up-front fee will drive members to spend more, much in the way Costco (NASDAQ:COST) operates its business. At the end of the day, users want to get the most out of the annual membership fee, and this could help drive incremental spending to its business.
Wal-Mart has chosen to use its massive retail footprint to operate its online grocery business efficiently, allowing it to charge only $5 or $10 per delivery, depending on the test area. The hope here is that its potentially wider reach and more affordable service will be a hit among suburbanites.
In the video below, Fool contributors Steve Heller and Asit Sharma help investors make sense of the next battleground in retail.