Walmart’s ambitious plan to beat Amazon on free one-day shipping is here
In the age of free two-day shipping with Prime, few companies can challenge Amazon’s dominance when it comes to products arriving right at your doorstep with effortless speed.
Well, until today. Walmart is launching free, one-day shipping on 220,000 items ranging from batteries to diapers, so long as you order $35 or more. The initiative is launching in Las Vegas and the Phoenix area this week. Other markets will soon follow. Walmart reports that its one-day shipping will reach 75% of the U.S. population by the end of the year.
It’s a bold move for a company that notoriously overlooked online retail while Amazon grew to dominance over the past 20 years. But Walmart has been working aggressively to right its wrongs, having recently launched a smart and beautiful new website and an experimental connected store that’s, in some ways, smarter and less intrusive than Amazon Go.
The battle to save both physical and digital retail from a complete Amazon takeover is very real. Retailers are trying myriad strategies to differentiate themselves: Some have concocted experiential, Instagrammable pop-up shops. Others, like e-commerce juggernauts Everlane or Wayfair, have opened brick-and-mortar stores. Giants like Ikea have shrunk their stores down for urban locations, while Target has focused on launching exclusive merchandise to get you coming back again and again.
But shipping speed, in particular, has been a priority for the industry since Amazon set the stage in 2005. That’s when Amazon began offering free, unlimited two-day shipping to Prime subscribers (or with a $35 spend). Now, Prime subscribers can also pay for one-day shipping, or often get free or paid same-day shipping. Amazon has also committed to $800 million in fulfillment center upgrades to launch free one-day shipping nationwide to Prime members at an undisclosed date–though it appears to be rolling out in some markets on some items now.
In response, Target launched free two-day shipping nationwide (to REDCard holders or those who spend a $35 minimum) in time for the holidays last year. A program called Target Restock allows you to order 35,000 items including household essentials, like toothpaste, for a $2.99. And for a $99 yearly subscription, you can get unlimited same-day orders through Shipt, an option that rivals Prime.
But Walmart’s announcement puts it elbow to elbow with Amazon, without any subscription fees at all. Not only is Walmart promising to ship more items faster than Amazon, it’s doing so cheaper, too. Prime costs $120 a year. Target doesn’t charge much for its Restock program, but it costs about 10% on top of your spend. Walmart has promised one-day shipping for anyone–free.
The promise of “low prices” is a key part of Walmart’s consumer appeal, explains Janey Whiteside, EVP and chief customer officer–but she insists faster shipping will actually save Walmart money, too. That’s because Walmart has spent an undisclosed amount of time and capital setting up a nationwide system of distribution centers that sounds similar to Amazon’s own (the shipments aren’t coming from individual Walmarts, as one might expect). Formerly, ordering something online from Walmart meant it could come from anywhere in the U.S. Now, your order will be directed to the closest center, which will ship everything in a single box. And that’s possible because each center has a carefully curated inventory of what she calls “items relevant to people in those locations.”
“In Phoenix, you’re more likely to have sunscreen year round, compared to the northwest,” Whiteside explains. “It’s curated to what we know is super important to location.”
This localized curation is key to Walmart’s strategy in brick-and-mortar stores, too. But it also means that, while Walmart will one-day ship 220,000 items free nationwide, no one person will actually be able to order that many items from any one region. (Whiteside did not disclose how many products each distribution center would hold.) Other restrictions to note include the fact that Walmart will not be shipping very large items, like furniture, nor will it ship groceries.
But either way, Walmart is the first company to promise free, one-day orders nationwide by the end of this year. And Amazon is racing to do the same–a rush demonstrates that retail is more competitive than ever, and America’s legacy retail giants aren’t going down without a fight. Oh, and if you ever go to the store to buy paper towels again, you’re either a sucker or you have way too much time on your hands.