According to a survey of 1,000 US consumers by Credit Suisse, 61% of respondents said “yes” or “maybe” to subscribing to Walmart+. This is despite the lack of details on the new service to date. WMT has been expected to roll out its Walmart+ subscription offering this year, which the press (Recode) reminded the market of Tues, sending shares +7% that day.
While most details are still unconfirmed, the subscription service is expected to have various delivery-related perks, discounts, among other features that should provide a competitive alternative to Amazon Prime. With COVID, this seems to be a good time to launch Walmart+.
CS is constructive on the opportunity for Walmart+ mainly because:
- Subscription provides greater stickiness and the potential for a significantly larger recurring revenue stream and incremental sales/gross profit dollars.
- A built-in customer base that it can convert. CS estimates an immediate addressable base of 5m, with upside to 10-20mn.
- Opportunity to capitalize on new customer growth related to COVID; 46% of survey respondents that order groceries online from WMT started after COVID-19.
- Strong below-45 age group response: 70% of respondents 18-44 interested in WMT+, which is a key demographic moving into peak spend years in many of WMT’s core categories.
- Survey suggests customers interested in using Walmart+ to buy staples as well as higher margin categories (e.g. apparel, footwear, accessories).
Having said that, respondents believe Amazon still has faster deliver and better online experience. The results also show consumers want free shipping with no threshold, which could be a differentiator for Walmart+. CS estimates that order frequency could grow by 50%+ if the threshold is eliminated, but it would also drive a lower basket size.
Submitted July 09, 2020 at 05:48PM by street-guru https://ift.tt/2Cpzvkg
