Dive Brief:

• Walmart unveiled its new membership program, Walmart+, that ties together unlimited free delivery from stores and other benefits.
• The service costs $98 a year, or $12.95 a month, with a free trial period, according to a press release. The company said it would "continue to have delivery options with a per-delivery transaction fee so customers can choose the service that's best for them."
• Along with unlimited delivery, the service includes fuel discounts and a Scan & Go checkout option for in-store shoppers. The membership becomes available to all shoppers starting Sept. 15, Walmart said.

Dive Insight:

The comparisons between Walmart+, in the works for months now, and Amazon's Prime membership service are obvious. They both trade upfront fees for costless delivery per order, potentially making customers stickier to the retailer through the subscription. 

Historically, Walmart has highlighted its lack of a subscription fee in its marketing. It was a potential competitive advantage over Amazon that consumers could receive free shipping on orders over $35.

But Walmart has a long way to go if it truly aims to build a direct competitor to Prime. Part of the latter's value to customers is access to video and music content, along with other assorted perks and services. For a single fee, Prime customers get both an e-commerce and media service. Amazon last year added grocery delivery to its lineup of Prime perks.

"Walmart's Walmart+ program will help retain new customers that it has gained as a result of COVID-19, as well as deepen relationships with long-standing customers, and as such is a positive for the company," Moody's vice president and senior credit officer Charlie O'Shea said in emailed comments. "It should not be considered a direct 'competitor' to Amazon Prime due to its focus on shopping and shipping/delivery benefits versus Prime's significant content offerings, which we continue to believe are a significant portion of the value proposition for Prime as fast or discounted delivery is becoming increasingly commoditized as it is easily replicable."

For its part, Walmart touts its store base in its Walmart+ membership. "Along with the power of its online presence, Walmart+ has the reach of more than 4,700 stores, including 2,700 stores that offer delivery as fast as same day," the company said. 

In recent periods, grocery has been a major source of Walmart's digital growth. That is good news for the company in terms of competing with Amazon, though it has also meant in the past that low-margin items make up a large portion of its online sales, something executives have acknowledged. In the second quarter of this year, during which digital sales basically doubled, Walmart made important headway in expanding its category mix online and expanding profits from its e-commerce business.