A Walmart exec explains the surprising reason low-income shoppers pay for a delivery membership

Walmart’s chief revenue officer said cash-strapped shoppers are “doing the math” and seeing that a delivery membership can save them money when factoring in gas or public transportation costs.

Conveniences like same-day delivery, especially for perishables items like groceries, are one of the more luxurious features of modern retail.

For the price of an annual membership (or a one-time fee), shoppers can have any of tens of thousands of items delivered to their front door in a matter of hours.

As it happens, Walmart says such perks are not just reserved for middle- and upper-income households.

The retail giant has said its Walmart+ membership is popular across all income segments, including lower-income households and those that receive government assistance.

Through Walmart+ Assist, qualified recipients can get half off the typical $98 per year membership fee and tap in to the benefits like free delivery on orders over $35. Amazon offers a similar discount on Prime.

“The primary benefits of the Walmart+ membership are delivery-oriented in nature,” said Walmart’s chief revenue officer, Seth Dallaire, who heads up the Walmart+ program, while speaking Wednesday at the Goldman Sachs Communacopia Technology Conference in San Francisco.

“We have a number of members that are paying for membership that are also using government assistance to shop with us,” he said.

When Dallaire first joined Walmart from Instacart in 2021, he said he wouldn’t have expected such households to have the discretionary income to pay for a Plus membership.

“But what we found when we talked with those members was that they were doing the math of taking public transportation or taking an Uber or Lyft to the store or filling up the gas in their own vehicle to drive to the store,” he said. “They’re doing all of that math to say, ‘Look, at that particular price for the membership, if I can have the groceries delivered to me and not and save the cost of the public transportation or the trip or the fuel, this actually works.'”

Walmart is still working toward profitability in e-commerce, but in the meantime, executives are crediting this convenience play with helping the company grow market share (with lots of small orders) during a challenging time for the broader retail industry.

Even Dollar General CEO Ted Vasos acknowledged Walmart’s success at picking up more of the sales that would otherwise be his bread and butter.

“The guys down in Bentonville are doing a pretty nice job in garnering the available traffic that’s out there from other retailers,” he said.

And where it once might have been easier to stop off at Dollar General on the way home from work than to visit a Supercenter for a gallon of milk, some low-income shoppers are opting to pay an annual fee to Walmart to top up their groceries — without having to go out of their way.