Wal-Mart will test new subscription service to rival Amazon’s Prime

May 13, 2015, 10:25 PM UTC

Wal-Mart Stores (WMT) is developing a new tool to fight back at Amazon.com (AMZN). The world’s largest retailer will start testing a new unlimited shipping service this summer that will cost half what the online giant’s Prime service does.

Wal-Mart will charge customers $50 a year for a service that will deliver online orders at no additional cost within three days, Ravi Jariwala, a company spokesman, told Fortune. The initiative was first reported by The Information.

The test comes as Wal-Mart, one of the biggest online retailers with nearly $13 billion in e-commerce sales last year, looks to re-accelerate its digital growth. In its most recently reported quarter, digital sales rose 18%, a slower pace than for the year as a whole.

Wal-Mart will report first-quarter earnings next Tuesday.

The subscription service will be available by invitation only at the outset and will include around 1 million items, a fraction of the 7 million available online. Jariwala said customer feedback would guide any next steps, including a bigger roll-out in the future.

Amazon has used Prime as a powerful tool to lure millions of new customers and build loyalty. Without a similar program, Wal-Mart has likely found it difficult to compete in an era when online sales are critically important.

Unlike Prime, which costs $99 a year, Wal-Mart’s service will not include free video and music streaming, free digital books or photo storage, which Amazon does.

Wal-Mart and Amazon are also preparing to compete in another e-commerce arena, online grocery orders. Amazon already sells online groceries in a number of markets while Wal-Mart has a similar test underway.

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