Why Walmart+ Is Kind of a Letdown

Analysts are underwhelmed by the program’s pitch

Walmart's new membership-based loyalty program seeks to save customers time and money—but will they pay for the privilege? Walmart
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Walmart finally announced a Sept. 15 launch date for its Walmart+ membership program, along with benefits like free shipping, a checkout-free payment option and discounts on gas.

During a conference call with reporters on Monday, chief customer officer Janey Whiteside deflected a number of comparisons to Amazon Prime, saying Walmart+ is intently focused on saving its own customers time and money.

A defensive move to protect 2020 gains

Allen Adamson, co-founder of marketing and activation agency Metaforce and a professor at NYU’s Stern School of Business, called Prime the “elephant in the room,” saying Walmart+ feels like a defensive move to lock in shoppers. That’s in part because he said Walmart+ doesn’t offer anything innovative, which prevents it from being more of a forward-thinking offensive play.

“For a loyal Amazon Prime user, there’s no news here,” he said. “There’s nothing enticing to make people say, ‘I have to try Walmart.’”

The good news for Walmart, however, is because there’s “such a tidal wave of people doing their shopping online,” there are plenty of customers for both programs.

Kyle Rees, director of research at Gartner, pointed to a report in which 80% of the CMOs surveyed said their primary strategy to fuel growth in 2020 is to focus on existing markets, so he agreed Walmart+ is something of a defensive strategy to retain consumers who have started shopping online because of the pandemic, not to lure in Prime members.

Rees also said the $98 price tag, which is about a 15% discount from an annual Prime membership, could be appealing for rural and suburban consumers, who are more likely to shop at Walmart anyway.

“Given the tumultuous environment that Covid [brought] and a variety of social challenges now, I think we see a world in which brands have to be much more protective of and do more to appeal to their core base of customers,” Rees said.

The main problem: lackluster benefits

Walmart+’s benefits include a $35 threshold for free shipping. So instead of simply ordering a single item they may have forgotten, members will have to wait to build bigger baskets to trigger free shipping. That, Rees said, may be OK for large weekly grocery baskets, but makes Walmart+ “a harder sell to the impulse shopper who relies on Amazon to complete orders of everyday basics.”

Additionally, author and retail expert Bruce Winder asked why consumers would pay $98 a year when they can simply drive to one of the retailer’s 4,700 U.S. locations to avoid the $35 minimum and can opt for curbside pickup to retain the contactless experience.

“Many retailers have already offered free delivery if you buy $35 worth of product with no fee, so this is not a great deal,” Winder said.

Gas discounts, another benefit, could potentially be valuable to Walmart shoppers, but don’t go far enough.

That’s in part because fuel perks are already part of membership warehouses such as Costco, which reportedly offers a discount of about 21 cents per gallon—and comes with a $60 membership fee. Walmart+ is offering one-quarter of that discount.

“Honestly, I think if the gas benefits were more compelling, it would be a no brainer,” said Sucharita Kodali, vp and principal analyst at Forrester. “I don’t understand why the gas benefits are only 5 cents off a gallon—[Walmart-owned warehouse retailer] Sam’s Club already sells gas for 30 cents cheaper than other gas stations nearby.”

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@lisalacy lisa.lacy@adweek.com Lisa Lacy is a senior writer at Adweek, where she focuses on retail and the growing reach of Amazon.