Walmart just made a move that should terrify Amazon.
Starting Tuesday at 8 a.m., Walmart will offer free two-day shipping on 2 million items in orders that are more than $35.
All Walmart customers will qualify for the free two-day shipping. There are no fees, and no enrollment in membership programs is required.
"We upped the ante here and decided not to charge people for it," Marc Lore, CEO of Walmart US e-commerce, said on a call with reporters Monday.
In comparison, Amazon offers free two-day shipping only to members of its Prime program, who pay $99 annually for membership.
Other Amazon users can qualify for free shipping — but without the two-day delivery — on orders of $49 or more.
As a result of the change, Walmart will scrap its ShippingPass, a two-day-shipping program it has been testing for several years that costs $49 annually. The company said it would refund customers currently enrolled in the program.
"At a very fundamental level, we just don't believe in having to charge for a membership," Lore said.
Two million of the 30 million products carried on Walmart's website will be available for two-day shipping. Those items will include Walmart's most popular products, including baby necessities, pet products, foods like cereal and peanut butter, cleaning supplies, electronics, and toys, the company said.
Customers must spend $35 for free two-day shipping to their homes, but there is no spending threshold for free two-day shipping to stores.
Offering free two-day shipping can be a costly and profit-draining endeavor for retailers — which explains why Amazon charges customers $99 annually for the service.
When asked whether Walmart could raise prices to offset the cost of the new service, Lore responded with an emphatic "no."
"It won't affect our pricing at all," he said. "In fact, we are looking to get even more aggressive on the pricing side."
Lore said this is the first of many announcements to come for Walmart e-commerce, which he characterized as "moving at the speed of a startup."
"We've got a lot of things planned for the year," he said. "This is the first of many."
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