Amazon Under Attack As Walmart Rolls Out Free Two-Day Shipping For Everyone

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January 31, 2017 10:29am NASDAQ:AMZN

NASDAQ:AMZN | News, Ratings, and Charts

Amazon.com, Inc. (NASDAQ:AMZN) now faces some major competition in the “free shipping” retail space, with Wal-Mart Stores Inc (NYSE:WMT) upping the ante and offering free two-day shipping without a subscription.


USA Today has some more detail on the move:

Upping the ante in the shipping wars, Walmart is scrapping a subscription program that gave members free two-day delivery in order to make the service available to all of its customers starting Tuesday.

There’s only one catch: shoppers must meet a minimum order size requirement to qualify for free shipping:

Walmart customers shopping for items ranging from pet food to peanut butter will be able to get those items delivered to their homes within two days at no extra cost for a minimum purchase of $35. If they have the products delivered to a local store, customers don’t need to meet a spending threshold.

Walmart had previously been testing a pilot program called Shipping Pass, which cost $49 a year for unlimited free two-day shipping. That service was clearly Walmart’s answer to Amazon Prime, which currently costs $10.99 a month for unlimited two-day shipping, along with a large host of other benefits including streaming video, music, and Prime-exclusive products.

WMT has decided to do away with the program, however, and instead roll out free shipping for everyone without a subscription fee. Customers that signed up for Shipping Pass will have their membership costs refunded.

It’ll be interesting to see if and how Amazon responds to the change. It’s unlikely the company will offer free two-day shipping outside of its Prime model, as the company instead offers free non-Prime five-day shipping on many of its items.

Historically, AMZN prefers to add significant value to the Prime service rather than compete on price. In that vein, perhaps we’ll see a corresponding announcement from CEO Jeff Bezos soon about a new Prime account feature, because this announcement from Walmart is certainly significant enough to warrant a strong response.

Amazon.com, Inc. (NASDAQ:AMZN) was trading at $822.25 per share on Tuesday morning, down $8.13 (-0.98%). Year-to-date, AMZN has gained 9.65%, versus a 1.48% rise in the benchmark S&P 500 index during the same period.

Meanwhile, Wal-Mart Stores Inc (NYSE:WMT) was trading at $66.20 per share on Tuesday morning, down $0.22 (-0.33%). Year-to-date, WMT has declined -4.22%.


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