Online Retail War Turns Ugly: Wal-Mart Responds To Amazon With Free 1-Day Shipping
Ain’t capitalism grand: much to the chagrin of Elizabeth Warren, Bernie Sanders and AOC, when companies actually compete, it’s the consumer who winds up getting the benefit. In this case, online retailers are so desperate for your business, they are in an constantly escalating price war as to how quickly, and for how cheap, they can get you the products that you order.
In the war’s latest chapter, Walmart teased that it is soon going to be taking on Amazon with one day free shipping – without a membership fee. On Twitter, Walmart appeared took a shot its rival on Friday stating…
One-day free shipping…without a membership fee. Now THAT would be groundbreaking. Stay tuned.
— Walmart (@Walmart) April 26, 2019
Amazon, on the other hand, said last week that it’s going to spend $800 million in the current quarter to reduce delivery times for Prime customers to one day from two, sending competing retailer stocks tumbling, and sunk Walmart shares by 2% on Friday, the retailing giant’s biggest drop in about two months. Amazon was up 2.5% to its highest in almost 7 months as analysts raised their price targets after the announcement. Analysts believe that Walmart can easily match Amazon’s one day shipping aspirations.
Deflating some of the euphoria, Sanford Bernstein analyst Brandon Fletcher said: “One day shipping is neither shocking nor difficult for retailers at scale.”
Fletcher previously worked for Walmart’s strategy and operations department and said that the retailer’s 156 distribution centers mean that it wouldn’t require much more capital investment to build out a one day service. He also stated that since a majority of the US population is concentrated in urban areas, this could make it easier to implement one day shipping. Fletcher looked at research conducted by consultants A.T. Kearney that showed Walmart could get into one day shipping by only adding 8 new distribution facilities.
Walmart has offered free two-day shipping on orders of $35 or more since early 2017, which helped it keep up with Amazon. Amazon still accounts for about half of all e-commerce spending in the United States. This $35 threshold has also been taken on by other retailers, like Target, to help offset the cost of delivery.
Total retail transactions with free shipping were up 13% in North America last year and were up 8% through April 15 of this year. Amazon Prime now charges customers monthly and annual fees, amounting to about $119 in the US for a year. Prime customers get shipping discounts and free two day delivery on most items.
Based on the way things are going, and the fact that these companies are so eager to get you products as quickly as possible in the scramble to monopolize market share, soon customers won’t even have to place orders: Walmart and Amazon will just pre-emptively send you all the things they think you’ll need, then just wait for you to return what you don’t use.
Consumption and capitalism, hand in hand: it’s the American way.
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