When Amazon launched a funky membership program called Amazon Prime in 2005, Walmart boasted larger profits than Amazon had revenue. Fifteen years later, though, Prime is the key reason for Amazon’s dominance over Walmart in online sales.
That pressure has pushed the traditional retailer to burn tens of billions of dollars to fight back while its executives have cycled through various stages of reaction to Prime’s ascent: denial, followed by meek competition, followed by a reversal that seemed to signal Walmart wanted to stick to a free, no-membership strategy.
But Recode has learned that over the past 18 months, the world’s largest brick-and-mortar retailer has explored creating its own paid membership program that would include perks that Amazon can’t replicate, in part to avoid a direct comparison to Prime. Amazon now accounts for nearly 40 percent of all online retail sales in the US, according to eMarketer, and Prime is a huge reason why. Walmart is a distant No. 2 with only a little more than 5 percent of the US e-commerce market.
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