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Walmart Just Gave Shoppers a Big Reason to Drop Amazon

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Wal-Mart scraps Amazon Prime competitor in favor of new free shipping tactic

U.S. retail giant Walmart has launched a free two-day shipping service to customers' homes and stores, with no membership fee.

Walmart previously offered free two-day shipping to customers who paid a $49 fee to participate in Shipping Pass, a subscription service it was piloting. The caveat is that there is a minimum purchase required for free shipping to homes, which Walmart lowered from $50 to $35.

The only catch is that, unlike with Amazon's Prime membership, Walmart customers still have to meet a $35 threshold to qualify for two-day shipping.

Marc Lore, head of Wal-Mart's e-commerce operations, said the company's offer will be "most compelling" for shoppers looking for low prices, a wide assortment and fast shipping. Only these members can enjoy free two-day shipping without a minimum purchase, but they do pay $99 a month for that privilege. Before Jet, Lore had sold his earlier e-commerce company Quidsi, home to Diapers.com and others, to Amazon.

The decision to scrap the membership fee is Lore's boldest move yet to challenge Amazon since he took charge of Wal-Mart's struggling online business.

Customers should find the new free shipping option available now. He also agreed with Lore, believing free two-day shipping is now the norm for e-commerce success.

Prime has more than 50 million members in the USA, according to Cowen and Co.

Walmart has fired yet volley at Amazon. But it's possible others may find it to be a hindrance: Amazon, after all, has been conditioning them for years to place orders however they want, perhaps firing off multiple orders of single items in a matter of minutes. Some 2 million items are eligible.

Meanwhile, Amazon's customer relationships keep getting stickier, as Prime membership goes beyond free shipping and expands to video, Kindle Library, and the Echo.

Of course, Walmart too has a streaming service (it bought Vudu in 2010, and offers free ad-supported streaming of older films), and its stores have always been a prime target during the Black Friday shopping rush.

He indicated there will be more changes at the world's largest retailer.

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