Wal-Mart to Scrap Its Amazon Prime Rival

By Sarah Nassauer 

Wal-Mart Stores Inc. is abandoning its effort to create a rival to Amazon.com Inc.'s membership program.

The service, called ShippingPass, was introduced almost two years ago and offered free two-day shipping for customers that paid the $49 annual membership fee. Instead, Wal-Mart will offer free shipping on more items it sells online and lower the minimum purchase required for free shipping on all orders to $35, from $50.

Wal-Mart declined to say how many people had signed up for ShippingPass, which was similar to Amazon's $99 Prime program.

Under the change Tuesday, Wal-Mart plans to offer free two-day shipping on about 2 million products on Walmart.com. The site sells about 30 million items, mostly from third-party sellers.

"We are hoping to build loyalty on the fact that you are able to get free two-day shipping...without a membership," Wal-Mart's e-commerce chief Marc Lore said Monday on a call with reporters. "This day and age, two-day shipping is just table stakes."

Wal-Mart plans to refund ShippingPass members the cost of the membership.

Wal-Mart has spent billions boosting e-commerce sales and speeding up deliveries of online orders. Last September, Wal-Mart bought Mr. Lore's company Jet.com Inc. for $3.3 billion, placing him at the head of e-commerce operations.

Since then, it has also shuffled the leadership ranks of its e-commerce operations in California, and last week it laid off about 200 e-commerce employees there as part of broader corporate job cuts.

Wal-Mart started offering ShippingPass in the spring of 2015, first as a free three-day shipping membership program for $50 per year. Last year, Wal-Mart made it a two-day window and cut a dollar off the annual fee.

Wal-Mart used ShippingPass to test and ramp up its logistics and online warehouse network on an easier to manage, limited number of shoppers, says a person familiar with the strategy.

Now Wal-Mart is able to ship millions of products to any house in the U.S. in two days, Mr. Lore said.

The Walmart.com products that will automatically qualify for free shipping will include everyday purchases such as shelf-stable food, household cleaning supplies and diapers, he said. While those staples aren't big moneymakers for most e-commerce players, they can help attract shoppers who buy them frequently.

Write to Sarah Nassauer at [e-mail]

(END) Dow Jones Newswires

January 31, 2017 00:15 ET (05:15 GMT)

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