UBS analysts forecast that Walmart Inc.’s WMT, +0.52% new membership program, Walmart+, will attract 10 million members by the end of next year.
Walmart+, which launched on Sept. 1, costs $12.95 per month or $98 per year. A key offering is unlimited delivery.
If each of these 10 million members were to spend an incremental $100 per month, it would add $12 billion in additional sales through this channel in a year.
“These members should contribute incremental spend, enabling Walmart to sustain healthy growth from its e-commerce segment,” analysts led by Michael Lasser wrote.
A third of consumers that UBS polled between Sept. 3 and Sept. 8 said they were likely to sign up for the service.
Nearly a quarter of respondents (22%) indicated they shop at a Walmart store more than once a week and 17% shop on the retail giant’s e-commerce site more than once per week.
However, it will cost money to add all of those members. UBS estimates the cost at $200 million to $300 million in 2021.
Analysts note that American customers are becoming more comfortable with subscription services, with Amazon.com Inc.’s AMZN, +0.66% Prime program boasting about 112 million members.
UBS rates Walmart shares buy with a $148 price target.
Walmart stock is up 15% for the year to date while the Dow Jones Industrial Average DJIA, +0.19% is down 6% for the period.