Sam’s Club takes on Costco and Amazon with a new strategy
Sam’s Club announced yesterday that it is consolidating the number of membership options it offers from three to two and that, as previously announced, it is ramping up efforts to drive its online sales business.
The announcement continues a busy year for Sam’s, which last month announced it was giving its hourly workers a pay raise and a bonus, only to follow up with the sobering news it was closing 63 of its clubs and laying off thousands.
Jamie Iannone, chief executive officer of SamsClub.com, wrote in a blog post that the warehouse club’s new membership options include the basic Club (formerly Sam’s Savings) for $45 and Plus, a premium program that includes free shipping on most of the items the retailer sells online as well as on its Member’s Mark private label items with no minimum purchase. Plus members will also get cash rewards on purchases, access to early shopping hours in clubs, as well as pharmacy and optical discounts.
Mr. Iannone also said that the first Sam’s fulfillment center dedicated to online purchases would open in Memphis, TN in early spring. He said Sam’s is looking to “accelerate” the rollout of similar fulfillment centers in the back half of 2018. The company is looking at a wide variety of locations, including Central Florida, the Chicago area, the Mid-Atlantic, the Northeast, Southern California and Texas.
Ultimately, Mr. Iannone wrote, Sam’s is “focused on creating the quickest and most convenient shopping experience” for club members. He pointed to the chain’s Scan & Go technology and Club Pickup as two features that have advanced this strategic goal.
With its focus on e-commerce, Sam’s appears to be looking to undermine chief rivals Costco and Amazon.com as well as newcomers such as Boxed.com, whose CEO has spoken about the possibility of moving into brick and mortar.
Costco, which has gotten more aggressive with its online offerings in the past year, including in-club pickup and delivery in partnership with Instacart, is still relatively under-developed in e-commerce. Sam’s, which has failed to break Costco’s hold on the top spot among warehouse clubs, sees e-commerce and an integrated online/offline experience as key to changing that dynamic.
The Plus membership, with its annual fee and free deliveries with no minimum order element, appears similar to Amazon Prime with the key difference that many orders placed with Sam’s will be on items sold in bulk quantities.
- Creating the Membership You Love the Most – Sam’s Club
- Surreal to so real – Sam’s closes 63 clubs after Walmart announces pay raise – RetailWire
- Forget Kroger. Will Boxed open its own stores? – RetailWire
DISCUSSION QUESTIONS: Will Sam’s new membership options and e-commerce strategy help it grow its business? Do you expect competitors – Costco, Amazon or others – to take any actions to thwart any potential advantage Sam’s may gain?