Why a former Amazon exec believes Walmart Plus will not threaten Amazon’s Prime model, despite the big-box store’s dominance in grocery

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Walmart Plus does not roll out nationally until September 15. But the much-anticipated membership program has already been dubbed a rival to Amazon Prime.

At $98 annually for free delivery on 160,000 items including groceries, Walmart Plus is priced at slightly less than Amazon Prime’s $119 a year. The program also offers members discounts for fuel and access to a scanning app to skip in-store checkout lines.

Despite the hoopla, there’s at least one former Amazon exec who isn’t buying into the “buzz” surrounding the new program.

James Thomson, who used to work as a business head at Amazon working with third-party sellers said Walmart Plus will likely be irrelevant in the current shopping environment and will not threaten Amazon Prime, despite its dominance in grocery.

Grocery dominance is not a predictor

Thomson and other experts agree that Walmart’s biggest advantage over Amazon exists in its grocery business.

Cowen senior equity research analyst Oliver Chen said in a recent report that Walmart’s advancement in delivery and curbside pick-up has put it in a good position to beat out its competitors in the grocery sector.

But the story is different for Walmart’s non-grocery categories. And when it comes to Walmart Plus, Thomson said the grocery growth will likely not be enough.

“Walmart.com’s non-grocery business is tiny compared to Amazon,” he said. “If you take online groceries out of the equation, Amazon has more than recovered and will more than make back its share of online sales in Q4.”

So while the idea of Walmart Plus is exciting in theory, Thomson said that the growth in Walmart’s online grocery business shouldn’t skew people’s perspective when it comes to evaluating the companies e-commerce performance as a whole. 

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“Take online grocery out of your numbers, and the world’s very, very different,” Thomson said.

Additionally, the popularity of Walmart’s curbside pickup is not necessarily a benefit for Walmart Plus either. With more people looking to do curbside pickup, Thomson said the draw of delivery for both first-party and third-party sellers will not be enough to make Walmart Plus a serious competitor to Amazon. Many products from third-party sellers will not be available for curbside.

“It looks good, but it’s not relevant right now,” Thomson said of Walmart Plus.”The Walmart.com customer is going to the physical store to do curbside pickup.”

SEE ALSO: Analysts say Walmart’s grocery dominance can be traced to certain key advantages it has over rivals like Amazon and Kroger

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Source:: Business Insider

      

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