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Whole Paycheck Tracker: Amazon, Walmart And Apple Scrap For Subscription Business

The Amazon and Walmart claim on the shopping and entertainment subscription business is getting a bit looser. Their claim on this small section of the U.S. whole paycheck is important because it is a key to the loyalty play that defines the Amazon and Walmart business model. And this week, Apple is trying to get part of that business.

Announced during WWDC in June, Apple One combines the company’s many subscription services such as Music, News and Apple TV into a $14.95 per month plan. That audience will either need to add to its monthly bill for subscription services (both for shopping and entertainment) or Apple will need to convince the segment of the population that does not subscribe to either that they need to join the Apple package. Here’s the rub: According to PYMNTS research, only 29.8 percent of American consumers are without at least one of the Amazon or Walmart services.

A PYMNTS study of a census-balanced sample of 2,165 consumers conducted Oct. 27-28, 2020, reveals that roughly 17 percent of U.S. consumers report a Walmart+ membership, just a bit more than a month after its launch. That compares to 68 percent of consumers who report having Amazon Prime — a program that launched in February 2005 and now counts 150 million members globally. Of that 17 percent with Walmart+, 15 percent are consumers who already had an Amazon Prime account and about 2 points from people who didn’t.

But what about the segment of the population that has shunned both? PYMNTS research shows clear delineations in the demographics of that group. First, they’re older. The group is comprised first and foremost of seniors and baby boomers who account for 46.1 percent of this group. Next up is Gen X at 25.8 percent with bridge millennials, millennials and Gen Z rounding out the rest at between 13 and 19 percent.

PYMNTS research also found that 33.9 percent of the group has not attended college and 44.9 percent earn below $50,000 per year. Geographically, around 40 percent live in either a rural area or a small town. The persona then for the non-attached over-indexes on age, income, education and geography, which should play well for the Walmart + subscription. It matches the income and education profile almost exactly. It also gives credence to the argument that the Walmart + subscription doesn’t have enough stickiness to drive the mass market memberships it is looking for. The plan at present lacks an entertainment component that Apple and Amazon have.

“Walmart needs to flesh out the subscription program with more perks to convince consumers to sign up, experts say,” said S&P Global. “It should leverage its vast brick-and-mortar network to bring consumers into stores before the holidays, enhance current deals and add new services such as media content.”

“If they want to really encourage mass adoption, it’s going to have to include more benefits,” said Andrew Lipsman, principal analyst with eMarketer, in an interview. “Amazon has won on a combination of price, selection and convenience, and they’ve almost ruthlessly made sure that Amazon is best in class on all of those dimensions. People are very entrenched in that, and that is why [Walmart+] isn’t going to change people’s Prime buying behavior.”

Quality programming is a key factor in subscription services. As Danielle Gotkis, senior vice president at Recurly, told PYMNTS, “The number of consumers who are at risk of canceling their services once the pandemic recedes is 24.4 million. That number could strike fear in the hearts and bottom lines of subscription-based businesses around the globe — but let’s unpack that stat and see what’s really happening. Since the pandemic began, 15 million new subscribers have begun subscriptions, and 96 million new subscriptions have been added. About half of new subscribers say they are very likely to keep their subscriptions once the pandemic ends.”

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