Can Walmart replicate Amazon’s success when merging retail with entertainment?
Retail giant is taking a leaf out of the Prime playbook by bundling streaming with its membership program. For our Evolution of E-commerce Deep Dive, we look at why this might be a wise move.
When retail and streaming collide / Walmart
This month, subscribers to Walmart’s membership scheme will get free access to Paramount+. It might seem like an unlike pairing, but as retailers chomp at the heels of Amazon’s mighty Prime membership, the merging of retail and entertainment could become the norm.
Bundling video subscription platforms with other products and services isn’t a new concept. Pay TV providers and mobile operators started carving out these types of deals with SVODs five years ago in a bid to reduce churn.
Rewards-based retail memberships are also not a new concept, but if commerce brands want to attract more members and incentivize spending then they need to offer a sweeter deal.
A Walmart membership costs $98 a year, or $12.95 a month, and includes free delivery and shipping, fuel discount and early access to promotions. Adding Paramount+’s essential plan as a perk would save a Walmart member $59 a year.
Ryan Douglas, commerce strategy lead and program architect at Wunderman Thompson-owned Gorilla Group, says Walmart needed Paramount+ to “sweeten that $100 membership deal”. “Walmart has been behind the curve when we talk about e-commerce and retail, compared with Amazon in its capabilities,” he says.
Walmart’s costly membership has so far failed to stack up to Amazon Prime’s $139 a year scheme that gives users music, video, gaming, free delivery and Whole Foods discount. “It’s difficult for Walmart shoppers to up and pay an extra $100 a year, and for what perks?” asks Douglas.
Douglas thinks that with inflation forcing consumers to shop down-market, Walmart might make a success with this offering. “A lot of people who are now paying $140 for Prime – they might make a transition down to Walmart as they will still get some of those complimentary services.”
Walmart has attempted to add video products to its offering in the past when it acquired the film and TV rental service Vudu before selling it to NBCUniversal in 2020. Despite its “unsuccessful track record”, Douglas says the retailer has upped its game and believes it could do better this time.
Competitor Target offers a similar scheme to Walmart, giving four months of Apple+ as part of its membership program, which is free to join.
Ed Kim, executive vice-president of commerce and global service lead at IPG-owned MRM, says both Walmart and Target’s bundling deals suggest a trend that other retailers are looking to tap into. ”Memberships are so lucrative that attracting and retaining retail subscription members will be fierce,” he says. According to Kim, the next wave after adding video content to memberships will be services like gyms.
Disney is also reported to be mulling a membership program akin to Amazon Prime that would offer discounts to its theme parks and to merchandise tied to its Disney+ streaming service. Although details are sparse, Disney’s chief executive officer Bob Chapek has been vocal about wanting to cross-sell across the Disney portfolio.
Jen Jones, chief marketing officer at e-commerce platform Commercetools, says opportunities will lie in integrating shoppable TV, but warned the “checkout experience is going to be crucial”. If a particular show starts spiking in popularity, Disney may want to offer more related products or add a flash sale to the store quickly, says Jones. “In order to do this, the company needs a commerce architecture built around flexible APIs and headless commerce that allows it to quickly and easily build seamless shopping experiences.
“Knowing that fans are fully immersed in its programming while streaming its latest episodes, Disney is capitalizing on impulse buying, reducing friction in the customer journey and further involving customers in its overall brand experience by adding this shoppable video component.”
Rich streaming data
Fusing retail and entertainment have huge benefits from a data sharing perspective as streaming services have some of the richest first-party data. According to Douglas, partnering with Paramount+ gives Walmart and its brands access to a treasure trove of viewing data to help with better targeting. “That becomes really powerful from a media owner perspective,” he says.
Being able to offer brands video viewing insights might tempt “advertisers that are looking to diversify away from Amazon to spend more at Walmart,” adds Douglas.
For Disney, marrying its streaming data to its commerce arm could help it determine what products or services to invest in, says Jones. “So the next time a new season of The Mandalorian airs, Disney will be ready for high-traffic searches for Baby Yoda products, T-shirts and more.”
This plays into the burgeoning retail media industry, which Jonathan Lewis-Jones, managing director at Publicis Commerce says is ”transforming the way that brands work with retailers, disrupting legacy supplier funding models”.
What’s in it for the streamers?
Tom Harrington, head of television at Enders Analysis, says in a competitive streaming market these services need lower churn. “Anything that helps with churn and customer acquisition right now would be a plus – I’d imagine Paramount+ would tie in with Thames Water if given half a chance,” he says.
This strategy emerged five years ago when SVOD’s realized that by bundling with traditional pay-TV operators they could slow churn, which then led to similar carriage agreements with mobile operators. “Linking with retail seems a logical next step in a tough, competitive market,” concludes Harrington.
For more on the Evolution of E-commerce, check out The Drum’s latest Deep Dive.