Sam’s Club Fends Off Amazon With Pilot Online Subscription Service
For a while there, it looked like Sam’s Club, a unit of Wal-Mart Stores (NYSE:WMT), was safe from the online behemoth that is Amazon (NASDAQ:AMZN). But then we remembered who we were dealing with. In fact, Sam’s Club, the popular wholesaler that rivals Costco (NASDAQ:COST), is far from in the clear, and that’s why the company is currently testing a new subscription service that may help it keep its lead on Amazon’s already creeping inception.
The Wall Street Journal reported on Sam’s Club new program, My Subscriptions, which the company is testing in a limited number of markets, and explained in its report Thursday that the new service is meant to allow customers to order items online via a subscription service. Subscribers to My Subscriptions won’t have to pay Sam’s Club shipping fees on subscription items, but they won’t get additional discounts.
If you’re wondering why the program rings a bell, it’s probably because Amazon already launched a conspicuously similar one, Subscribe & Save, in 2007. Its services offer customers the opportunity to make their wholesale purchases online, and unlike Sam’s Club’s program, subscribers can get up to 15 percent off in discounts depending on their order size. That condition sets Subscribe & Save apart from My Subscriptions, but according to the Journal, Sam’s Club service still covers 700 items in categories, including baby, beauty, and office supplies, and that breadth alone could help it rival Amazon.
In addition, Sam’s Club’s reputation for fresh food, groceries, and basic consumer products is another thing the wholesale club has going for it. Customers have long flocked to the brick-and-mortar retailer for their wholesale needs, and Sam’s Club and Costco continue to offer the best prices in the game — something Amazon usually doesn’t let continue. Nevertheless, at least for now, Sam’s Club has its physical sales to hold on to, regardless of how its online service performs.
What’s interesting about the newly minted Amazon-Sam’s Club rivalry is that the two companies are becoming more similar than many may recognize. Their biggest similarity is in the subscription service they both offer for their loyal customers, and those subscriptions in and of themselves help keep the companies performing positively. As of now, Sam’s Club boasts a stronger membership base than Amazon thanks to its 47 million subscribers, but the latter isn’t too far behind, with a base of about 35 to 40 million customers.
Although the popularity of Amazon Prime has continued to grow significantly as of late, likely threatening Sam’s Club’s business, the price of a membership is due to rise at least $20 to $40, and though that is bad news for Prime subscribers, it’s good news for Sam’s Club. That increased charge could deter some from renewing their subscription and subsequently takes away their guarantee of free shipping and consumer goods services that Subscribe & Save puts forward.
Still, Sam’s Club shouldn’t get too confident about Amazon’s potentially slowing Prime program, because the e-commerce giant already has another business plan up its sleeve, and it’s one called Pantry. According to the Wall Street Journal, the Web retailer is now focusing on Pantry, a program that will allow customers to buy goods like toilet paper and cleaning supplies in bigger bundles and will help them save on shipping costs. That’s where My Subscriptions and Pantry may go head to head. The services look very similar on paper, although many details for both have remain undisclosed.