“Many people still don’t realize that Walmart is becoming a tech company,” Paul Cuatrecasas, founder and chief executive of investment bank Aquaa Partners, and author of 'Go Tech or Go Extinct', told FoodNavigator-USA.
The first hint of Walmart’s transformation from retailer to tech company in disguise came with the acquisition of Jet.com in 2016, according to Cuatrecasas. In its latest Q1 2021 financials, Walmart said that it would discontinue Jet.com to accelerate its omnichannel strategy.
However, ‘discontinue’ really meant that Walmart would be integrating the business into its larger online retail ecosystem after seeing four years of strong growth, which has only continued to soar at the height of pandemic shopping, according to Cuatrecasas.
In its latest Q2 2021 earnings, e-commerce nearly doubled (+97%) in the quarter, surpassing the already strong results the company saw in e-commerce in Q1 2021 (+74%).
In its journey from online retailer to tech company, Walmart announced its interest in acquiring social media platform, TikTok -- which has roughly 800 million users worldwide and counting -- as part of its omnichannel business strategy.
“The company’s interest in TikTok is a part of this ‘tech-like’ approach to growing its business,” said Cuatrecasas.
In a public statement, Walmart commented on the possible acquisition (in a partner bid with Microsoft) of TikTok, stating: “We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses.”
A deadline of Sept. 15 for the acquisition of TikTok's US operations has been set by the Trump Administration, and other tech giants including Oracle are vying for ownership.
“Unlike most of its peers, Walmart is a dinosaur with wings,” said Cuatrecasas.
Walmart+ Membership
The initial list of benefits (below) offered by Walmart+ will continue to grow over time, said the company.
- Unlimited free delivery: Same-day delivery on more than 160,000 items from tech and toys to household essentials and groceries. This service was previously known as Delivery Unlimited – a subscription service that allows customers to place an unlimited number of deliveries for a low, flat yearly or monthly fee. Current subscribers will automatically become Walmart+ members.
- Scan & Go: Unlock Scan & Go in the Walmart app — a fast way to shop in-store. Using the Walmart app, customers can scan their items as they shop and pay using Walmart Pay for a quick, easy, touch-free payment experience.
- Fuel discounts: Fill up and save up to 5 cents a gallon at nearly 2,000 Walmart, Murphy USA, and Murphy Express fuel stations. Sam’s Club fuel stations will soon be added to this lineup.
These benefits come in addition to the retailer’s existing customer offerings such as free curbside pickup, NextDay delivery and two-day delivery.
Walmart+ vs. Amazon Prime
The announcement of Walmart+, which will be available to customers beginning Sept. 15, has drawn obvious comparisons to Amazon Prime.
On paper, the memberships appear to be structured similarly: a Walmart+ annual membership costs $98 a year or $12.95 a month with unlimited free delivery (Amazon charges $119/year or $12.99/month, and free 2-day delivery on all orders).
And for Walmart+ to succeed and capture users, the service must meet the expectations and standards Amazon Prime has set (i.e. free delivery, additional shopping benefits outside of grocery), said Cuatrecasas.
The Walmart+ debut has covered many of these standard bases, and like a tech company, it will improve over time, he predicted.
“Walmart+ helps deliver what Walmart’s customers want, which is speed, convenience and reliability at an overall low cost. Because Walmart operates with an ‘only the paranoid survive’ mentality, you can expect the Walmart+ service to get better and better over time,” he said.
Walmart is well positioned to win against Amazon
While a strong move on Walmart’s part, the membership is in some sense not a direct rival to Amazon Prime, which brings with it digital music and movie offerings, said Scott D. Bowman, managing partner of Chicago-based Clareo, co-Founder of TWIN.
“However, it’s clear that Amazon has set its sights on the grocery sector for some time now. With this new offering, Walmart is well positioned to win against Amazon given its massive scale and footprint [90% of Americans live within 10 miles of a Walmart store, from which many online orders are fulfilled],” Bowman told FoodNavigator-USA.
Among its more interesting features, is the Scan & Go technology, a touch-free, in-store shopping experience accessed through the Walmart app offered by Walmart+.
“The integration of their Scan & Go feature will enable it to both create a radically simplified, frictionless experience for consumers, but leverage the rich consumer data it will be amassing to create more personalized and engaging experiences — something that will enable it to strengthen its differentiation,” said Bowman.
“Ultimately, we believe retailers will need to combine radical convenience with radical reinvention of customer engagement and experience to survive, and thrive, in a Convenience 2.0 world. Technologies and services like Walmart is now rolling out are positioning it well to do precisely that.”
