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The Wall Street Journal this morning reports that Walmart is looking to compete with Amazon Prime by testing a new two-day shipping subscription service and building a more robust regional delivery network.

According to the story, "Last year Wal-Mart began experimenting with a three-day shipping service for members who pay $50 a year. The program called “ShippingPass” is similar to Prime, Amazon’s $99-a-year service with free two-day shipping. Starting Thursday, ShippingPass members will get free two-day shipping for $49 a year, says a Wal-Mart spokesman. He declined to say how many people have signed up for the service, which is only available by invitation. Standard delivery on can take around a week."

To make the service work, the Journal writes, "Wal-Mart will rely on eight massive e-commerce warehouses around the country, the last of which will be built by year’s end." The retailer plans to move away from its use of national shipping services like FedEx and use more regional services as it ramps up the program.
KC's View:
One of the things that Walmart has to figure out is how to bring down shipping costs, which can make or break an e-commerce business; Amazon is said to ship something like six or seven times the number of items that Walmart does, which allows it to bring down its costs ... and even Amazon is engaged in an ongoing effort to better control the fulfillment process, own more of the elements that are pat of it, and bring down its costs.

What Walmart is doing makes sense, and it illustrates the degree to which Amazon is setting the rules of the game, challenging its competitors to play the game as well as it does.