Walmart, the world’s largest
retailer, is trying to one-up Amazon by introducing a “prime” membership of
their own. The initiative has been named
“Tahoe” and is currently promoting a yearly membership at a price of $50, half
the price of Amazon’s Prime membership (CIO).
The new multi-purpose initiative aims to increase Walmart’s yearly
revenue, but most importantly, attack their largest online competitor.
In this day in age, consumers want
their products fast and at the cheapest price.
It is for this reason that memberships like Amazon Prime are so
successful, and the reason why Walmart wants to get in on the action. Both programs involve offering customers a
yearly rate for free shipping on online orders.
Walmart, while offering a cheaper price, cannot deliver their orders as quickly
as Amazon can. CIO.com has stated that
Walmart plans to offer “unlimited
"free" delivery on select items in three days or less” (CIO). Amazon already guarantees two-day shipping
with their Prime membership, and according to Bloomberg.com, Amazon has already
introduced same day shipping to Prime members in major cities such as
Manhattan, Dallas, and Miami (Bloomberg).
Walmart is currently the largest retailer in the world. Why mess around with a new online membership
such as “Tahoe?”
Walmart has created this initiative just to attack
Amazon. They believe that customers will
do anything to pay a price cheaper than that of Amazon Prime, even if it means
waiting a few days for the delivery of their products. It is very understandable that Walmart is
operating under this philosophy because it is the way they have functioned
since the dawn of their company. Walmart’s
mission statement has always been to offer the public the lowest prices out
there, and it is the very reason they have developed multiple successful promotions
such as the “price match guarantee.”
While in theory Walmart’s “Tahoe” seems like a great
idea, I do not think it is the right time for this initiative. Amazon Prime has
been active for ten years and has grown by about 50% in the United States in
just 2014 alone (CIO). No matter how
hard they try, Walmart will need to spend years of research and development to
get to the point where Amazon is today with their Prime membership. The prime reason that this initiative will
not work out for Walmart is because of Amazon’s speed. Just as Walmart prides themselves on their
low prices, Amazon prides their company on delivery speed. They have developed
many programs such as an entire robotics field just to further improve shipping
speed. No matter how cheap Walmart can make their “Tahoe” membership, I believe
most of the public will stick with Amazon because of their speed and
reliability. Walmart should spend more
time and money improving technologies to advance shipping speed. I believe if they reach a point in the future
when they think they can keep up with Amazon’s speed, then they should
introduce “Tahoe” to the public.
I believe Wal-Marts idea of attacking Amazon is a good one. Not because they will defeat them in this field but someone needs to slow down Amazon from taking over almost everything, and what better way to do so than attacking what happens to be their most successful piece of business at the moment. A huge retailer such as Wal-Mart with more superior funds in comparison to other companies is the ideal opponent, and can be a real threat that will keep Amazon on their toes. Also the risk factor for Wal-Mart isn’t that great. If their “Tahoe” operation fails it wont be that big of deal because they will still be one of the top retailers, if the operation succeeds it will shake up businesses world and Wal-Mart will advance even further away from other retailers, and pose a serious threat to amazon, only securing their effective presence in the states for years to come.
ReplyDeleteWhile this may slightly slow down the business of Amazon, I do not see this plan working out for Walmart. People value the speed that Amazon provides. In addition, Amazon prime provides other benefits, such as access to free music, TV shows, and movies. This is most likely the reason why Walmart can provide their service for cheaper, because they do not over these services. I also do not see loyal Amazon Prime members switching to Walmart's service because Amazon sells many more items than Walmart does as well, because they are huge on third party selling.
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