Walmart's (WMT) Walmart+ Can't Stack Up Against Amazon's (AMZN) Amazon Prime

Recently, Walmart (NYSE: WMT) unveiled its newest weapon in the ongoing fight to reclaim retail market share from the internet's primary retail juggernaut, Amazon (NASDAQ: AMZN). Some have even gone so far as to call this new weapon the “Amazon Prime Killer.” It's called “Walmart+”, and though it certainly has some advantages of its own, it's not likely to do a whole lot of damage to Amazon going forward.

Field-Stripping Walmart's Latest Weapon

First, let's get into the particulars behind Walmart's newly-minted weapon and what it brings to the table. It essentially works as Walmart's version of Amazon Prime, offering a range of special deals for anyone willing to pay for an annual membership.

Walmart has been working on this particular weapon since back in February, reports noted, and just the announcement of its emergence was enough to drive Walmart's stock price up around 7% at one point yesterday. This was a development being taken quite seriously by investors, as it made things quite clear that Walmart had no plan to lay down and die while Amazon became the new retail juggernaut.

While Walmart hasn't yet released all the details about Walmart+, the details that have emerged are enough to catch attention, if not necessarily declare Walmart the winner in the ongoing retail wars. The program will cost customers $98 per year, which doesn't actually work out to a whole number per month. Those who sign up for the service will get same-day delivery on groceries and general merchandise, plus get access to fuel discounts and certain product deals. They'll even get access to a certain quantity of two-hour delivery through the Walmart Express service.

Where Walmart Has the Edge

With what we know so far, we know Walmart+ will give Walmart a certain edge over its massive juggernaut competitor Amazon. The first and most glaringly obvious is the grocery delivery function; while Amazon does have such capabilities itself, they're often limited, whether by geography or goods available. Sure, anyone can get a box of candy bars delivered via Amazon, but try to get a dozen eggs and you might be out of luck.

Amazon's connection to Whole Foods helps here, but it only works in places where there's a Whole Foods on hand, which is far from “everywhere.” Walmart, meanwhile, has stores in just about every major and minor city in the US; it was found as far back as 2012 that 90% of Americans lived within 15 miles of a Walmart. That makes Walmart a credible force for nigh-immediate grocery delivery.

Additionally, Walmart has the edge on price. That $98 price tag may be incongruous—why it didn't pick a number that divided evenly by 12 is unclear at best—but it has a psychological advantage of being “less than $100 a year.” It also has the immediate advantage of being “less than Amazon Prime”, which runs customers $119 per year.

With 58% of all grocery orders from new online grocery customers going to Walmart—as compared to just 14% of same heading for Amazon—it's clear Walmart has an edge there and will likely use it for all it's worth.

Where Walmart+ Falls Short

There's little doubt that Walmart+ will have certain advantages for its customers, and probably draw some interest to signing up. The sheer convenience of rapid grocery delivery—especially in this shaky coronavirus world we have now—will be a draw, especially for current Walmart customers.

The problem, however, is that this isn't likely to draw a lot of people away from Amazon Prime. There might be people who will keep Prime and add Walmart+, though $220 a year for subscription delivery services might be a bridge too far for some. The biggest immediate drawback for shoppers is that Walmart+ will have no subscription video service component, complete with originals, the way Amazon Prime does. Yes, Walmart had Vudu, and that could have been a part of things, but Walmart sold Vudu to NBC Universal's Fandango back in late April. There are speculations that Walmart will set up a deal with some other subscription video service to fill that gap, but nothing's materialized on that front yet.

Worse, Walmart actually has a $98 per year delivery service already called “Delivery Unlimited,” which makes “Walmart+” little more than a refinement of a currently-existing service that has already failed to kill Amazon Prime. So essentially, Walmart will be going into battle against Amazon armed with a cheaper and much more regional product for Walmart-grade merchandise. It's going to get some interest, that's clear, and every little bit helps. But calling this an “Amazon Prime Killer” makes a mountain out of a speed bump.