Tuesday, September 01, 2020 12:03:28 PM
Walmart Stock Is Rising Because Walmart+ Is Finally Ready to Battle Amazon -- Barrons.com
9:19 am ET September 1, 2020 (Dow Jones) Print
By Teresa Rivas
Walmart stock was rising Tuesday, after the company said its new subscription service, Walmart+, will make its debut in two weeks, with a yearly subscription priced below Amazon Prime. The move is the retail giant's latest pushback against Amazon.com and shows the value of its store base as it does.
Walmart (ticker: WMT) said Walmart+ will combine its e-commerce business with more than 4,700 stores, 2,700 of which have same-day delivery capabilities. A subscription, which costs $98 a year or $12.95 a month, will give members unlimited free delivery from stores, fuel discounts, and the ability to use the 'Scan & Go' feature in the Walmart app, to pay while they shop in stores.
The news isn't a surprise. There were reports in early July of a Walmart subscription service. The speculation helped boost Walmart shares, and analysts said it could help the company compete against Amazon.com (AMZN), especially in key areas such as groceries.
Amazon Prime costs $119 a year, or $12.99 a month. It comes with a host of other benefits beyond fast free shipping, including Prime music and video streaming. In its news release, Walmart said it plans to "leverage its wide-ranging strengths to add additional benefits for members in a variety of services and offerings." Prime comes with a 30-day free trial, compared with Walmart+'s 15 days.
Walmart stock was up 2.8% to $142.80 in premarket trading Tuesday as Dow Jones Industrial Average futures slipped 0.4%. With the shares up nearly 17% year to date through Monday's close, it isn't as if Amazon has done much to hinder Walmart's growth lately. Still, investors have been eagerly awaiting the announcement of Walmart+, because it marks a further push into the e-commerce giant's territory and comes as consumer habits are in flux, and thus potentially more open to change.
Retaining the new customers that big essential retailers have gained during the pandemic is one way to expand market share beyond this year's panic buying. As shoppers get more accustomed to curbside pickup and fast delivery, the convenience of programs like Walmart+ are one way to keep them coming back.
Walmart hasn't shied away from investing in technology and e-commerce in recent years, so it makes sense it would want to further flex its muscles in this way, especially as it leverages its huge store base to facilitate fast order fulfillment.
Nothing about 2020 is expected, but perhaps one of the strangest twists is the fact that in the year when nearly everyone started shopping online is also the year that big-box retailers' large network or bricks-and-mortar locales were cemented as a competitive advantage instead of a drawback.
Write to Teresa Rivas at teresa.rivas@barrons.com
(END) Dow Jones Newswires
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