Sam's Club Changes Membership Proposition


With free shipping and no minimum purchases, Sam's Club is working on the time element, but only for its most loyal customers.

On a media call Tuesday afternoon, Sam's Club CEO John Furner and CEO and Executive Vice President of membership and technology Jamie Iannone also gave an update on a January announcement to shutter 63 club's and transform some into e-commerce fulfillment centers. "Members can expect more from us and we're excited to exceed their every expectation".

With a $100 annual fee-just one dollar more than the cost of a similar Amazon membership-Sam's Club Plus members will receive free shipping on almost all items with no minimum purchase. The offer does not require a minimum purchase, and the available items include almost every product under the company's Member's Mark private label brand.

Plus members will continue to receive other benefits like cash rewards, early shopping hours, and pharmacy and optical discounts.

The retailer also simplified its membership structure by reducing the number of memberships from three to just two: club and plus. Eventually, Sam's Club is hoping to guarantee one or two shipping for most of its products. He says the chain is targeting suburban families with children who have annual incomes between $75,000 and $125,000 - which closely tracks Costco's core customers. Scan & Go and Club Pickup are already popular with members, but the retailer promised more time-saving options are coming soon. But he also believes Sam's must strike a "delicate balance" because it doesn't want to walk away from business members too much.

Officials of the chain said that they are trying to boost value and convenience with the moves. "Whether it works or not, your guess is as good as mine".

These new distribution centers will be augmented by up to 12 of the closed locations that will be converted into regional e-commerce fulfillment centers. Furner said Tuesday that the center should be ready to ship items by the end of March. Currently, the club chain relies on Walmart's supply chain network to make online order deliveries. Afterwards, the company plans to launch centers at Texas, Central Florida, Southern California, the Mid-Atlantic, Chicagoland, and the Northeast.

Free (or nearly-free) and expedited shipping has become a ground zero of sorts for brick-and-mortar retailers as they aim to compete with e-commerce giant Amazon.