Revenge of the consumer: Walmart's $120 bundle takes at Amazon and Costco

Walmart (WMT) unveiled a bundled Walmart+ and Sam’s Club Plus membership option this week in a direct challenge to Amazon Prime (AMZN) and Costco (COST). The joint membership costs $120 per year, which is a saving of $100 per year. It's also $19 cheaper than an annual Amazon Prime membership at $139 and $10 cheaper than Costco's $130 Executive membership but $55 more than Costco's $65 Gold Star membership. The biggest savings are for shoppers who now pay for both Prime and a Costco Executive membership, who would save $149 a year by switching to the bundle.

"This is a direct shot at Prime," United National Consumer Suppliers CEO Brett Rose told Retail Dive. He noted that at $120 per year a member gets a warehouse club, delivery, streaming, and gas thrown in. On paper, Walmart wins the value math easily, highlighted Rose.

“The timing tells you everything. Consumers are stretched heading into the holidays, and memberships lock in loyalty and recurring revenue before the spending gets decided,” Rose said. “Loyalty programs are what keep people coming back. However, not more so than lower prices.”

On Wall Street, Oppenheimer analyst Rupesh Parikh and his team believe consumers are the clear winners from the development due to the stronger combination of perks, the ability to have Walmart and Sam’s Club products delivered to your home with no markups, and minimal incremental costs to upgrade. "This new offering further strengthens Walmart's membership value proposition vs. Amazon Prime and COST. To the extent this membership program takes off, WMT should enjoy incremental wallet share gains, especially on the delivery front, but there is a likely initial P&L headwind near term," advised Parikh.

Looking ahead, the timing of the Walmart (WMT) just ahead of the holidays could put incremental pressure on Amazon (AMZN) and Costco (COST) to dial up promotional activity.