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Walmart’s Jet Acquisition: Why Amazon Shouldn’t Worry Too Much

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Walmart is trying hard to gain more users

Walmart (WMT) has taken several initiatives to drive its e-commerce business, including its latest acquisition announcement of Jet.com. Walmart is beefing up its offerings by expanding its online grocery ordering options, including store pickup and delivery.

Walmart also partnered with Uber and Lyft to test-run a grocery delivery service to compete with Amazon (AMZN). It introduced its ShippingPass subscription last year to compete with Amazon Prime.

All these efforts are crucial for Walmart. But these moves shouldn’t worry Amazon too much since Walmart has some catching up to do in the e-commerce space.

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Amazon Prime versus Walmart’s ShippingPass

Through its ShippingPass subscription, Walmart now offers free two-day shipping with no minimum order requirement for an annual fee of $49. This is an interesting move on the company’s part, as it could siphon some members from Amazon. However, Amazon Prime offers more than just free shipping.

Amazon Prime, which costs $99 per year, offers free two-day, same-day, and two-hour shipping along with video streaming services, music, and the ability to borrow books from the Kindle lending library. These offerings differentiate Amazon from other retailers such as Walmart, eBay (EBAY), and Target (TGT). They’re the main reasons Amazon has seen robust growth in its Prime memberships, as you can see in the above graph.

Walmart does have a price advantage over Amazon Prime, but given Amazon Prime’s vast offerings, many consumers may justify the additional $50 per year.

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