Walmart will be testing an Amazon Prime-like service this summer that will allow customers to pay $50 a year for unlimited shipping of select online purchases. It will cost half the price of Amazon’s $99-a-year membership program. For hardcore Walmart shoppers, the service might seem like a no-brainer. But is it?
Many will have to wait to find out firsthand. Walmart's unlimited shipping service won't be open to the general public, at least not initially. Participation in the test phase will be by invitation only, says company spokesperson Ravi Jariwala. (Sign up for the waitlist here.) Customer feedback during testing will determine how the program evolves, he says. Assuming, though, that Walmart keeps the annual subscription fee at $50, whether it's ultimately worth the cost will come down to your online ordering habits, how you value Prime's non-shipping benefits and a bit of basic math.
For starters, it's important to recognize that there's no indication Walmart’s service will offer the additional benefits that Amazon Prime does, such as free streaming videos and music, free book downloads and free online photo storage. And the 1 million products eligible for free shipping through the Walmart service will arrive in three days or less; Prime-eligible products arrive in two days or less. In other words, you get more for your $99 with Prime than just free shipping.
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Also keep in mind that Walmart.com already offers several ways to get free shipping, no annual fee required. There's no extra shipping charge for items purchased online and shipped to a store for pickup, for example, and orders of $50 or more ship for free as well (with arrival in six to eight days). For orders less than $50, it costs $4.97 for value shipping (six to eight days), $6.97 for standard shipping (three to five days), and higher but varying fees for expedited shipping options (one to three days). If you're a Walmart.com customer who typically meets the requirements for free shipping, the main benefit to paying an extra $50 a year for unlimited free shipping would be to receive purchases faster (three days or less versus six to eight days).
However, it’s worth noting that value shipping doesn’t necessarily take six to eight days. I recently placed an order on Walmart.com that qualified for free value shipping and received the item in just two days. Walmart.com shoppers who usually pay $4.97 for value shipping because their orders don't total $50 would have to make at least 10 such purchases annually to break even with a $50 unlimited shipping service.
Amazon isn't Walmart's only competition. There are free shipping options from other retailers that don’t require a membership fee. Target offers holders of its REDcard debit or credit cards free standard shipping on Target.com purchases plus a 5% discount when they pay with their cards. It costs nothing to get a REDcard; however, the credit card does carry a 22.9% annual percentage rate. As such, the debit card, which links directly to your checking account, is a better option. Target.com shoppers who don’t pay with a REDcard only have to meet a $25 purchase requirement to qualify for free three- to five-day shipping. Or they can avoid shipping fees by picking up online purchases in a store.
Other retailers such as Ace Hardware, Best Buy, Home Depot and Payless ShoeSource allow online shoppers to avoid shipping fees by picking up purchases at stores. And several retailers, including 6pm.com, L.L. Bean, Nordstrom and Zappos.com, offer free basic shipping on all orders with no minimum purchase requirement.
Get on the waitlist to participate in the testing phase if you think Walmart's unlimited shipping is right for you. It's one sure way to find out. But a better bet might be to wait for Walmart to complete testing and put its finishing touches on the unlimited shipping service. The price might drop or additional benefits might be added to attract more shoppers.
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