One of the only things the largest retailer in the world does not sell is a subscription-based rival from Amazon Prime.
But that could soon change with a Walmart subscription plan, a fresh slap in the face for Amazon (AMZN) and improving the case to invest in Walmart’s stock (WMT), says Morgan Stanley retail analyst Simeon Gutman.
“I think the interesting part of Walmart for us is the potential for Walmart +,” Gutman told Yahoo Finance’s first trade. “The reason it’s intriguing is because I do not think Walmart’s marching structure will be defined anytime soon. And so the next catalyst thinks something is that could change the story, a membership program that put itself at the forefront of e-commerce giant Amazon. We think the story could reshape for them. And we expect them to launch this program sometime in the latter half of the year. ”
Several reports of a Walmart subscription plan put forth in July.
Double Walmart +, Recode reported that the membership program will include fuel discounts, same-day shipping at no extra cost and other sweeteners. Price: $ 98 per year.
Shoppers walk through an empty parking lot of a Walmart in the Panorama City part of Los Angeles on Tuesday, August 3, 2020. A technical problem has caused a lag in the number of results of coronavirus tests in California, and doubts the accuracy of recent data shows improvements in the infection graph and hinders efforts to track the spread. (AP Photo / Richard Vogel)
A subscription service would provide Walmart with a new steady stream of revenue. It could take that money and use it to lower merchandise prices even further, and increase sales. Or it could reinvest in the company to provide some form of future return.
However, according to Gutman’s point, the service would likely support higher profit margins for Walmart (and a higher share price) over time.
A Walmart spokesman declined to comment on the company’s plans. But Walmart CEO Doug McMillion cleared the speculation of a debut on his call Tuesday morning.
“We have been testing membership with limited subscription delivery since last year. That customer offering was limited to a supply chain for groceries and consumables as a reason to sign up. Since that launch, we have proven to ourselves that we can pick and deliver a wide set of categories across the supersenter, not just food and consumables, but a wide range of general merchandise. We think that assortment and our ability to deliver nationwide with speed combined with a few other benefits for customers will make a compelling statement. That, we have moved on to a new membership launch. We will share more about that membership and the timing if appropriate, ”McMillon said.
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