Walmart released its Q2 2021 earnings report yesterday, presenting a 6% increase in its U.S. e-commerce sales year over year (YoY) and a 103% increase in the last two years.
Walmart’s e-commerce sales include Walmart.com, Sam’s Club — online and memberships — and the company’s most recent subscription offering, Walmart+. The company expects to reach $75 billion in global e-commerce sales by the end of the year.
Within the first two weeks of its release in September 2020, 11% of Americans subscribed to Walmart+, according to a poll conducted by Piplsay. Almost an entire year after its launch, the subscription service has more than 60 million members, according to PYMNTS.
Read on to learn more about Walmart+’s impact in the subscription industry and how it may surpass expectations and beat Amazon Prime.
Walmart’s E-Commerce Sales Growth
Walmart revealed plans to invest in its fulfillment capacity, supply chain, automation, and technology, according to its 2021 Investment Community Meeting. Through these efforts, Walmart expects to improve customer satisfaction and grow its e-commerce selections, like Walmart+.
“This new infrastructure will allow us to expand e-commerce assortment, enabling us to reduce both shipping time and cost,” said Brett Biggs, Chief Financial Officer of Walmart. “We’ll drive existing and new customer growth through initiatives like Walmart+.”
Walmart’s membership revenue alone now makes up nearly $1.2 billion of its Q2 2021 net sales.
While memberships are increasing, Walmart+ is a continued work in progress that will gain new features over time, such as Rx For Less: savings on eligible pharmaceuticals for Walmart+ customers.
Customer experience is at the forefront of Walmart’s priorities. “We don’t want to get ahead of ourselves and go sell too many Walmart+ memberships and have a customer experience that is less than our expectation, or their expectation,” said Doug McMillon, CEO of Walmart, at the investment meeting.
The quality of a product or service has the potential to provide value to both a customer and the business by taking the overall experience into consideration. Consumers are looking for trustworthy businesses that provide convenient and seamless shopping experiences.
Nearly 50% of consumers say subscription plans are more convenient than shopping in stores, according to PYMNTS. An individual is also four to six times more likely to purchase from a purposeful company, according to Zeno.
Subscribe & Save Competition
Walmart+ is in direct competition with Amazon Prime. The two memberships have similar offerings:
- Amazon Prime is $12.99/month, or $119/year, and offers free delivery, access to thousands of streamed movies and shows, and exclusive deals and access to products.
- Walmart+ is $12.94/month, or $98/year, and also offers free delivery with additional member fuel points and a Scan & Go feature for in-store shopping.
Despite the similarities, Walmart+’s subscription offering has virtually the same value but at a lower cost.
That difference is enticing for current Prime members. Fourteen percent of consumers who subscribe to both Prime and Walmart+ plan on cancelling their Amazon membership, according to Jungle Scout. Furthermore, more than 40% of e-commerce consumers are current Walmart+ members as of Q2 2021 — up 3% from Q1, according to Jungle Scout.
At the beginning of Walmart’s subscription launch, 38% of Americans considered it to be a threat to Amazon Prime, according to Piplsay. Walmart, unlike Amazon, provides in-person access to products, and some consumers enjoy that. Thirty-five percent of people who said they would switch from Prime to Walmart+ enjoyed the option to purchase items in person, according to Greenbrook.
Additionally, Walmart has managed to gain more than 60 million members in its first 11 months. In comparison, Amazon — which has more than 200 million Prime members worldwide — had roughly 2 million members four years after launching, according to Marketplace Pulse.
Walmart’s E-Commerce Quality over Quantity
Walmart launched Walmart+ as a way to simplify customers’ lives and accelerate the growth of its customer base, according to the investment meeting earlier this year. Rather than investing in customer acquisition and selling as many memberships as possible, Walmart is prioritizing the customer experience.
McMillon’s top priority as CEO is focusing on Net Promoter Scores (NPS) — a measurement that analyzes customer experience and predicts business growth. As long as Walmart+’s quality is pristine as it continues to scale, “the number of memberships will work out,” McMillon said.
Walmart’s investment in the quality of its subscription offering will improve its unique ecosystem of products and services, growing and satisfying its current — and future — customer base.
Key Takeaways:
- Walmart reported a 6% increase in its Q2 2021 U.S. e-commerce sales YoY and a 103% increase in the last two years.
- Walmart expects to reach $75 billion in global e-commerce sales by the end of 2021.
- Walmart+ has more than 60 million members in comparison to Amazon Prime, which had roughly 2 millions four years after launching.
- Walmart is planning for long-term subscription success by focusing on NPS rather than pushing membership sales.