Wal-Mart is terminating its fee-based, two-day ShippingPass program designed to compete with Amazon’s Prime service. In its place, Wal-Mart is lowering its threshold spending threshold for free two-day shipping down to $35. The previous threshold customers had to meet for free shipping was $50, and the previous delivery window was three to five days.
Walmart purchased start-up Jet.com from co-founder and CEO Marc Lore last year. Since then, Lore has made a number of changes to the world’s largest retailer.
Lore, now CEO of Wal-Mart U.S. eCommerce, said on Monday. “In this day and age, two-day shipping is really just table stakes. We Don’t think it’s necessary to charge a membership for it.”
The undisclosed number of customers who purchased a ShippingPass membership will receive a refund in full. Wal-Mart began testing the program in May 2015, offering a free 30-day trial. The service offered an unlimited amount of free deliveries for $49 a year, $50 less than Amazon’s Prime service. However, the program never achieved the same degree of popularity as Primes.
Amazon Prime includes ancillary rewards, like a music and video streaming service, as well as unlimited storage for photos. Amazon also recently introduced a member-only deal for a credit card that gives 5% cash back on Amazon purchases.
Leon Nicholas, chief insights officer at Kantar Retail, said in an interview that Wal-Mart had simply missed the window of opportunity for subscription success. According to Kantar’s data, about one-third of Wal-Mart customers have Prime memberships and have little incentive to switch.
Kantar’s data also reveals that the main reason Prime members renew their subscription at a rate of over 90% is for free two-day shipping. Wal-Mart will now provide this shipping option for customers who spend $35 or more.
Wal-Mart’s offer is applicable to 2 million products on the retailer’s website, compared to the 40 million eligible products on Amazon Prime.
Lore emphasized that the selection of items will make up a majority of what customers are already buying,”There won’t be too many products that you’ll want that won’t be available [for] two-day shipping.” According to Lore, the selection will be skewed toward essential items for everyday use.
