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Wal-Mart To Test Unlimited 2-Day Shipping, But Is It Too Little, Too Late?

Wal-Mart Stores, Inc. NYSE:WMT, Amazon.com, Inc. NASDAQ:AMZN - Wal-Mart To Test Unlimited 2-Day Shipping, But Is It Too Little, Too Late?

Wal-Mart Stores, Inc. WMT 1.29% is looking for new ways to compete with online giant Amazon.com, Inc. AMZN 0.11%, and the new unlimited two-day shipping is part of that effort. But, here is the million question — is it too little, too late?

Wal-Mart has deployed a two-day delivery offering through its ShippingPass e-commerce subscription program, according to the Wall Street Journal. It has cut its shipping time by one day to go head-to-head with Amazon Prime, which boasts two-day delivery service.

The price of the e-commerce subscription is also cut to $49 from $50 a year versus Amazon Prime, which costs $99 annually. The price cut positions Wal-Mart competitively versus Amazon.

However, analysts at Cantor Fitzgerald said the Amazon offers more incentives for $99, including streaming videos.

"ShippingPass is still in beta and is available only in select markets," analysts at Cantor Fitzgerald wrote in a note.

Currently, Wal-Mart runs eight fulfillment centers that support online sales as well as its 4,600+ retail stores. The company is also planning to create a regional delivery network by partnering with regional delivery firms to provide faster and cheaper delivery.

Wal-Mart is not alone in the market as other retailers are also trying out free-shipping programs.

Rival Target Corporation TGT 2.41% provides free shipping to customers when they pay with its loyalty debit or credit cards, and Overstock.com, Inc. OSTK 5.03% has a $20/year free shipping program.

At Time Of Writing...

  • Overstock.com was up 4.97 percent at $15.43.
  • Target was up 2.32 percent at $75.02.
  • Amazon was down 0.08 percent at $709.34.
  • Wal-Mart was up 1.26 percent at $65.76.
DateFirmActionFromTo
May 2016Deutsche BankMaintainsHold
May 2016RBC CapitalInitiates Coverage onUnderperform
Apr 2016Goldman SachsMaintainsNeutral

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