Sam’s Club is making a big e-commerce push, preparing to begin operations at its first converted store-turned-fulfillment-center in Memphis this spring and rebooting its membership plans to compete head-to-head with Amazon Prime.
The Walmart-owned warehouse retailer trimmed its membership offerings from three plans down to two. New to the annual $100 Plus plan is free shipping on most items, in addition to benefits such as extended shopping hours and $10 cash back for each $500 spent, all on top of the lower plan’s features. The lower-priced Club plan offers at $45 perks familiar to warehouse shoppers: a complimentary card for household members, offers applied automatically to the card, and omnichannel features such as the app-centric Scan and Go service as well as Club Pickup, the retailer’s version of BOPIS. These last two in particular have proven popular with time-strapped customers seeking convenience in addition to savings.
The Plus price point lines up with the $99 Amazon charges for Prime membership, which also affords access to streaming content, music and much more. Adding free shipping at a threshold customers were already comfortable with likely was a calculated gamble on Sam’s Club’s part; free shipping is among the most effective conversion tools online today. As e-commerce presents an irresistible opportunity and brick-and-mortar faces continuing challenges, Sam’s Club has addressed changing consumer behavior in reassessing both its business and the appropriate role of digital retail.
On Jan. 11, the company said closures would affect 63 locations, including a conversion of 12 stores into e-commerce fulfillment centers to accelerate delivery of orders originating online. A CNBC article said that those 63 locations employed an estimated 9,450 workers. The Memphis location is the first of these locations to be converted. Sam’s Club now operates 597 locations nationwide.
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Walmart is looking to improve the performance of Sam’s Club in its overall portfolio. “Transforming our business means managing our real estate portfolio and Walmart needs a strong fleet of Sam’s Clubs that are fit for the future,” said Sam’s Club CEO John Furner in a press release.
Sam’s Club’s push into e-commerce comes as Walmart’s digital business has made significant gains on Amazon. In its third-quarter 2018 earnings call, Walmart said that e-commerce sales grew 50 percent. In recent years, Walmart has purchased Bonobos and ModCloth to attract a more fashion-savvy millennial shopper; acquired Jet.com to accelerate its digital presence; and partnered with Lord & Taylor to offer the department store’s products on its e-commerce site. A December article in Forbes stated that Walmart’s desktop conversion rate rose to 4.7 percent in September, and was up 45 percent year over year.
RSR Research managing partner Paula Rosenblum said Amazon has always been a threat to warehouse clubs. “If Sam’s Club can execute properly, it can take away some of Amazon’s business, and perhaps more importantly, hold on to its own base,” she added.