Walmart has figured out something important about Amazon: The battle for shoppers isn’t just about who can get a package to the front door faster. It’s also about becoming part of a customer’s routine.
That is why Walmart’s latest move to expand its Walmart+ membership program makes a lot of sense.
The retailer recently added new in-store benefits, including 25 free 4-by-6 photo prints each month and savings on an eligible Money Center transaction every three months. Those perks join existing benefits such as free shipping and grocery delivery.
Of course, on their own, free photo prints aren’t going to make someone abandon Amazon Prime. But that’s not really the point.
Walmart is trying to make Walmart+ something customers use repeatedly like Amazon. And that’s a smart strategy.
Walmart and Amazon are fighting for the same customers
Amazon has spent years turning Prime into a remarkably broad membership proposition. A customer might join for free shipping but keep their subscription because Prime also includes entertainment, shopping events, and other savings.
Walmart is taking a somewhat different route.
Its biggest advantage has always been its physical stores. Walmart has thousands of locations, and those stores are already part of the weekly routines of millions of Americans. And Walmart+ gives the company a way to connect that physical footprint to its digital business.
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Meanwhile, it’s easy to argue that Amazon’s greatest strength is convenience.
Walmart, however, can offer a different version of convenience: Buy online, get groceries delivered, save on fuel, and take advantage of services you were already going to use.
Adding more in-store benefits makes the Walmart+ membership feel less like a delivery subscription and more like an everyday financial decision. And that’s exactly what Walmart wants.
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The small perks can become a big competitive advantage
The most interesting part of Walmart’s strategy is that it doesn’t necessarily need to copy Amazon feature for feature.
Walmart needs to give customers enough reasons to think, “I already pay for Walmart+, so I might as well shop at Walmart.” That’s the same basic psychological advantage Amazon has built with Prime.
The new perks are particularly useful because they connect Walmart+ to services that customers can use in physical stores. And more visits can lead to more purchases.
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Of course, there’s another benefit for Walmart that shouldn’t be overlooked. Its membership program also generates valuable shopping data that can support Walmart Connect, the company’s advertising business.
Reuters recently reported that Walmart Connect grew 44% in the latest quarter, with Walmart’s membership program helping provide the customer data behind its advertising operation.
In other words, Walmart+ isn’t simply a loyalty program. It can help strengthen several parts of Walmart’s business at the same time.
Walmart doesn’t need to beat Amazon at everything
Morningstar analyst Brett Husslein told Reuters, “They’re building it up to the point where it starts to look a bit more akin to Amazon,” referring to Walmart+.
The reality, though, is that Walmart is unlikely to displace Amazon as the dominant online marketplace simply by adding another membership perk.
But it also doesn’t need to.
The smarter strategy is to make Walmart+ useful and valuable enough that consumers don’t view Amazon Prime as the automatic choice.
Maurie Backman owns shares of Walmart.
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