VodkaPundit

Rumble in the Suburban Jungle

Look out Amazon Prime, here comes Walmart:

Walmart is reported to be working on a three-day, unlimited shipping service that will cost consumers approximately $50 per year. This is half the price of Amazon Prime, but it’s unclear if additional benefits will be included beyond free shipping on most orders. Scheduled to being testing this summer by invitation, the three-day shipping offer will be applied to more than one million products sold on Walmart.com.

Assuming Walmart can effectively harness the company’s existing distribution network to deliver products efficiently, the company may be in a solid position to compete with Amazon on speed of delivery. Of course, it’s going to be vastly more difficult to compete with the additional perks of Amazon Prime. Detailed by the Associated Press, Walmart spokesperson Ravi Jariwala mentioned that the company will not be able to compete with “free video or music streaming.”

Walmart shouldn’t even try to compete with Amazon on streaming services. Or at least Walmart shouldn’t try yet. Amazon’s digital cloud is probably the best in the world, and they have the rights to tons of content and cut-price streaming hardware and a much-used app for both Android and iOS. Walmart would just be competing against Amazon on price and content, they’d also be going up against Amazon’s ecosystem and huge base of happy customers.

What Walmart can and should leverage is physical proximity to their own huge base of happy customers.

That means one thing: Same-day delivery, the Holy Grail of virtual retailing. Amazon has been slowly building up infrastructure, here and there, in an attempt to deliver the goods on the same day. But doing so means losing the no-sales-tax advantage they enjoy across much of the nation.

Walmart customers already pay local sales tax, so that’s a wash. But if Walmart can undercut Amazon on price ($50 vs $99) and provide same-day delivery, thanks to the physical proximity of their customers to their stores…

Millions of Walmart customers could save $50 just in gas money each year.

That’s not to say it would be easy. A Walmart store is built so that the goods come in the back door, and leave through the front door via the cash register. Something, obviously, would have to give. They’d also need to either acquire their own fleet of delivery vehicles, or work out an arrangement with UPS, Fedex, the USPS, or all three.

But if they can get it done, same-day delivery combined with “everyday low prices” would be an enticing deal indeed.