Amazon and Walmart compete with new shipping fees

By

Edina Sultanik

Published
Feb 24, 2017

The battle for market domination between Amazon and Walmart is heating up as the two retail giants go head to head on shipping fees and speeds. Last month, in a bold move to compete with Amazon, Walmart announced that it would offer free two-day shipping for all its online customers on two million of its most popular items. The retailer also dropped the order threshold to qualify for free shipping from $50 to $35.

​Amazon countered swiftly, dropping its order minimum from $50 to $35 for its non-Prime members. Amazon's very successful Amazon Prime offers free two-day shipping to members with no minimum order amount, in addition to streaming movies and music, for a $99 annual fee. 

While Walmart is offering two-day shipping, Amazon is not.  Free shipping for Amazon's non-Prime members range from a  five- to eight-day shipping window, making Walmart’s free two-day shipping slightly more competitive. However,  Amazon offers free two-day shipping on over 50 million items, compared with Walmart's two million.

Walmart also discontinued Shipping Pass-- a program that offered subscribers who paid a $50 annual membership fee free two-day shipping on certain products. Shipping Pass was meant to compete with Amazon Prime. It was not successful and the program was canceled.
 
As part of a renewed focus on its online business, Walmart acquired Amazon e-commerce competitor Jet.com last year for $3 billion, and put CEO Marc Lore in charge of the company’s e-commerce strategy. The recent aggressive moves are the first major changes Lore has made at Walmart since the retailer purchased Jet last year.
 
Walmart’s online business is a fraction of that of Amazon’s, (Walmart’s online sales were $13.7 billion in 2015, compared with Amazon's $107 billion,) and Walmart’s online sales gained 29 percent in the fourth quarter, which ended Jan. 31.  In total revenue, Walmart still dwarfs Amazon, generating $486 billion in fiscal 2016, -- over three times as much as Amazon's revenue of $136 billion.