Walmart received some good news amid its ongoing retail war with Amazon: a new study by Auriemma Consulting Group shows that Walmart Pay shoppers spend an average of $319 monthly, which is more than the $291 monthly that Apple Pay users spend. According to Auriemma, one of the biggest reasons to use the Walmart app is to save money at the point-of-sale.

But Walmart received some bad news, too: the same study revealed that Walmart shoppers who can use Apple Pay and have a mobile payment preference are twice as likely to choose Apple Pay over Walmart Pay. Walmart has work to do – but Apple is not its real rival. Amazon is.

Walmart Fights a Bloody War

Walmart is in the midst of a costly war with Amazon to win the loyalty of retail shoppers. Each business has taken turns launching new products and services designed to steal market share from each other. Walmart has ramped up its digital business. Amazon has expanded into brick-and-mortar retail. Both Amazon and Walmart have built grocery delivery services.

And both businesses are trying to make payment as frictionless as possible.

As we have discussed on our blog, getting the mobile experience right is crucial for Walmart. The Walmart mobile app makes it easier for shoppers to shell out that $319 a month. But the app is also a springboard for other functions such as picking up prescriptions at in-store pharmacies. And Walmart is not the only retailer that makes mobile an important part of its retail playbook. Kohl’s has been relying on a mobile wallet app that includes personalized, in-store promotions based on a customer’s shopping history. The company’s latest financial returns suggest that the approach is working.

Amazon Fights Back

Walmart’s success with an all-in-one mobile app hinges on its  ability to draw people to its brick-and-mortar stores. The good news for Walmart is that foot traffic to its stores is increasing. According to Walmart’s latest quarterly earnings as reported in CBNC,

[Walmart] said it had the strongest growth in more than a decade at those stores open for at least 12 months, thanks to robust sales in its grocery and apparel departments, both of which Walmart has poured money into to compete with the likes of Amazon and Kroger.

But Amazon is fighting back on its own terms – by eliminating the need to even use an app. Its recently expanded Amazon GO grocery stores are completely frictionless. Shoppers walk into the stores, grab grocery items, and leave without even having to pull out their wallets and use an app. The catch: you have to be an Amazon Prime member to participate. Through Amazon Prime, Amazon stores all your payment data and charges you for the goods you remove.

Amazon GO stores, piloted in Seattle, are expanding to Chicago and San Francisco. And it’s reasonable to expect that Amazon is monitoring Amazon GO to emulate the cashier-less model at Amazon’s Whole Foods chain.

The Advantage of Amazon Prime

In essence, becoming a member of Amazon Prime is like joining an Amazon payments system. Amazon recently revealed that Prime has 100 million members. That’s 100 million people to whom Amazon can bundle services ranging from entertainment to groceries in frictionless fashion. Meanwhile, I estimate that about 38 million shoppers have used Walmart Pay based on the following:

So who will have the upper hand? The answer depends on how well each business bundles together services that eliminate friction and add value. Look to Walmart to add more functionality to its app as well as special incentives available only in-store. And Amazon will continue to enrich services for Prime members, especially in entertainment, where Amazon has been building a video and music offering. The consumer will benefit either way by getting more services that are easier to use.

Saul Delage

Saul Delage

VP Growth