late 1990s, it suddenly entered into a rivalry with

the biggest name in retail.

Always low prices, always Walmart.

Walmart has been at the helm of American shopping for

58 years.

It employs more people than any other company in the

world. And 90 percent of Americans live within 10

miles of one of Walmart's more than 4,700 U.S.

stores. The staggering size of Walmart kind of escapes

people. It's the largest corporation in the world in

terms of revenue. Yet when it comes to e-commerce,

Amazon is the clear leader, with 38.7 percent of the

market share compared to Walmart's 5.3 percent.

And with the global pandemic shifting shopper's

behavior for good, dominance in online shopping is now

paramount. So if you're that second site, you got to

be really good. You don't have to be as good as

Amazon, because no one will get there.

That's utopia. In perhaps its clearest competitive

move against Amazon to date, Walmart is now launching

Walmart Plus. The membership program is meant to rival

Amazon Prime, offering benefits that can't be

replicated online.

These guys are toe-to-toe and nobody wants to stop

swinging. Nobody wants to back down.

You know, the consumer is ultimately the beneficiary,

clearly. Here's a look at how Walmart Plus compares to

Amazon Prime and all the other ways Walmart is trying

to catch up as the pandemic makes online shopping an

increasingly crucial part of doing business.

Walmart has been working behind the scenes since at

least 2018 to create a competitor to Amazon Prime.

From our data study, we found that two thirds of people

that had already joined our premium loyalty program

would join another one.

Although the landing page says Walmart Plus is coming

soon, the pandemic delayed its planned release in the

spring. Walmart stock surged seven percent when it

looked like it would launch in July, but that didn't

happen either. When Walmart Plus is available, members

will likely pay $98 for benefits like unlimited

same-day delivery on groceries from the 1,600 of its

4,700 plus stores that do grocery delivery n ow.

When we did our data study, 81 percent of the consumers

joined Amazon Prime because of faster free shipping.

Only two percent joined because of grocery delivery.

So I think it's a real opportunity to leverage what

they already have in groceries and maybe what Prime

doesn't. And just this week, Walmart announced a

partnership with Instacart, testing out same-day

grocery delivery in four markets across California and

Oklahoma. Other perks are rumored to include early

access to sale events, discounts at gas stations

outside of Walmarts and Walmart-owned Sam's Club

stores and reserved parking spots in store lots.

As you think about Prime, 150 million, why would you go

head to head with that? If you take a unique approach,

which it sounds like Walmart is doing, you might be

able to get a lot of those customers.

Amazon launched Prime for $79 a year in 2005, at a time

when Walmart's profits were greater than all of

Amazon's revenue. If you look back at 2005 Prime had

one benefit, fast and free shipping, two-day shipping,

which was like unheard of.

Fifteen years later, some 150 million Prime members pay

$119 a year for one-day shipping on more than 10

million items with no minimum purchase amount,

same-day shipping on some three million items,

two-hour grocery delivery in 2,000 plus cities, deals

and sales events like Prime Day and access to Amazon's

entertainment branch, Prime Video, Amazon Music, Prime

Reading, Prime Gaming and Amazon Photos.

It's a pretty compelling value proposition, and that's

what anyone will have to deal with, w hat if they want

to try to compete with Prime?

Walmart doesn't have any entertainment offerings of its

own, now that it sold Vudu in April.

P rime members make up about 65 percent of Amazon's

customers and the program has a 95 percent renewal

rate after two years.

Walmart started chasing this type of loyal customer in

May 2019 by offering free next-day delivery on orders

over $35, less than a month after Amazon announced its

default one-day shipping.

With Walmart Plus, all orders will default to free

one-day shipping just like Prime.

Despite the launch of Walmart Plus and free fast

shipping, Walmart still lacks one big thing that

Amazon has - sheer volume of inventory.

Walmart.com has about 50,000 vendors selling items

online, while Amazon has 8.7 million.

That's why in 2016, Walmart bought discount online

retailer Jet.com for 3.3 billion dollars.

The acquisition brought relationships with a slew of

brands that were already comfortable selling on

Jet.com .

They are on track to more than quadruple their online

business since they acquired Jet.

It was an uh-oh moment for every other brick-and-mortar

retailer, because now the biggest brick-and-mortar guy

is now, you know, moving heavily online.

E-commerce is a scale game and you want to get as much

leverage as you can on your fixed infrastructure.

And as you get bigger, cost of goods goes down and you

get more leverage. Marc Lore spent two years at Amazon

before breaking off to start Jet.com , working to

undercut prices from the e-commerce megastores.

Walmart's purchase of Jet.com was the big move that

brought it into the big leagues of online shopping.

When the deal was made in 2016, Lore signed a five

year contract to run Walmart's e-commerce division.

I'm so excited to be at Walmart, having a lot of fun.

We're going to keep talking to you because I think that

you're the most inventive man in retail today.

Walmart shut down Jet.com in May, but it had already

brought an entirely new branch of online sellers onto

its marketplace. Walmart CEO Doug McMillon says he

would buy it all over again.

If you look at the trajectory of our business, it

changed when we made that acquisition and we've been

able to attract brands to Walmart.com - S'well, R

ay-Ban and Champion.

Historically, Walmart.com didn't sell things from

third-party vendors, but since the Jet.com acquisition

the number of products sold on Walmart.com has grown

up to 10 times higher, and the number of sellers on

its site doubled just in the last year.

So they started attracting more brands.

They retooled their website to be more streamlined and

more intuitive, more user-friendly.

And last year, Walmart partnered with Advance Auto

Parts. Walmart was not going to be a 100,000 SKU auto

parts retailer on its own.

They get that with Advance Auto.

This is probably the largest third-party relationship

that any online retailer has with a brick-and-mortar

retailer. And in an effort to reach a new type of

customer, Lore spearheaded the purchase of several

specialty apparel companies like Bonobos, ModCloth and

Eloquii, a lthough some have been sold again since.

A big portion of Walmart store customers are

lower-to-middle-income. I think what they tried to do

here and through the Jet.com brand was to continue to

go up market and go for more profitable customers,

urban millennials. And then they also introduced the

service Jetblack, which is an upscale personal

shopping service. For a large fee, Jetblack allowed

New York Walmart customers to text orders to personal

shoppers for home delivery.

But Walmart shut it down in February after it only saw

about 600 active members.

If we think about the dynamics of the very, very

affluent and wealthy today, I don't know if Walmart is

necessarily the company to be housing a brand like

that. But in June, Walmart pivoted again, announcing a

major partnership with Shopify.

Often referred to as the king of mom-and

pop-retailers, Shopify helps more than 1.4 million

small businesses run their online stores.

Now, these small businesses have a channel to try

selling on Walmart.com.

For now, Walmart says it's adding 1,200 of Shopify's

top merchants to its site in 2020.

Walmart wants a curated assortment on the website.

I mean, Amazon has a very wide-ranging third-party

business, and with th at comes some risk.

The partnership with Shopify is really important, I

think it's very strategic.

And I do think it is an attempt to pull away those

third-party sellers on Amazon.

There has been kind of a lot of tension between

third-party sellers and Amazon.

On July 29th, Jeff Bezos testified before Congress for

the first time in Amazon's 26 year history, partly in

response to questions about reported use of

third-party seller data to develop Amazon's own

competing products. The House Judiciary Committee is

investigating whether Amazon, along with Apple,

Facebook and Google, need to be governed by stricter

antitrust laws.

Why should a third-party so list their product on

Amazon if they're just going to be undercut by

Amazon-own ed product as a result of data you take

from them? I think what I want you to understand, and

I think it's important to understand, is that we have

a policy against using individual seller data to

compete with our private label product.

You couldn't assure Ms. Jayapal that that policy isn't

violated routinely.

While Amazon is battling to keep the trust of its

third-party sellers, Walmart still has a long way to

go if it wants to catch up with the millions of

third-party sellers that make up more than half of

Amazon's sales. The Walmart marketplace is a lot

smaller, so you could be, quote unquote, crushing it

on page one on Walmart and you're still not getting

that many sales. Still, Walmart has one big, long

standing advantage over Amazon, its 11,500 global

stores. If you're a third-party seller, like if you

can get into brick-and-mortar Walmart, you're going to

crush whatever sales on Amazon you're doing.

For sellers choosing where to reach customers, stores

are a big bonus and much more scalable.

So this diet pill company I worked at, they had 30

different products that we were selling on Amazon.

I launched a whole bunch of them. We brought their

sales from one million to three million.

And I thought that was like the greatest thing in the

world. But that was nothing, because I would see

purchase orders come across my desk for the Walmart

brick and mortar side, for the Walmart stores, there

would be like two million dollars just for like one

region of the United States.

Walmart stores also help keep down its costs in the

most expensive area of online retail - shipping.

If you can leverage those stores as your fulfillment

centers, meaning if I'm going to purchase something

and I'm in the Philadelphia area, have it come from

the store that's three blocks from my house as opposed

to Virginia , you know, price points go down and speed

goes up. Amazon has been spending wildly to try and

control the expensive shipping process, but it's 175

fulfillment centers and own network of planes, trucks

and contracted delivery drivers don't come close to

the reach of Walmart's 4,700 stores that allow its

trucks and drivers to travel a fraction of the

distance. Walmart had the advantage of getting product

from distribution center to the store, and then the

consumer handles the last mile for a lot of it.

Walmart uses its stores as distribution centers for

products, but also has its own dedicated network of

warehouses without a front-facing store.

Walmart remains dominant in another sector that's

largely dependent on brick-and-mortar stores -

groceries. We're not very densely populated, and so

it's hard to service, in an e-commerce model, grocery.

So what that means is that Amazon is really at a