Sam’s Club Announces Free Shipping to Compete with Amazon and Costco

In its attempt to compete better against its arch rival Costco Wholesale and online giant, Sam’s Club announced early Wednesday that it will now offer free shipping on many items to premium members as it restructures its membership program.

The bulk retailer is a Walmart Inc. unit and said that the majority of items it has for sale online will qualify and there will not be a minimum order for free shipping for clients who are “Plus” members, which has a cost of $100 annually.

The exceptions include merchandise that is available only for pickup at curbside such as fresh and frozen foods, bulk items, as well as products sent by a third parties directly to shoppers. Groceries represent almost 60% of the revenue at the company.

The new terms in the membership contrast with Walmart, its sister chain, which offers a $35 minimum for two-day free shipping without a membership being required. At the same time, Amazon offers its Prime members free two-day shipping.

The move by Sam’s Club is focused on creating an increase in memberships, which currently stand at approximately 47 million, at a time that such types of fees account for the bulk of its operating profits. It is also how a chain that has $53 billion a year in sales can compete with the likes of Amazon’s more popular plan, as the retailer offers faster delivery, and the intense loyalty of shoppers at Costco despite its status of being a laggard in e-commerce.

Another goal Sam’s Club likely has is increasing the awareness for Maker’s Mark its private label, which is an umbrella brand for every product of its own, from toilet paper to whiskey that competes with the Kirkland brand of Costco that is hugely successful with sales of more than $15 billion annually.

Though its business has seen improvement over the most recent quarters, Sam’s lags behind Costco due to weaker locations which are usually closer to Walmarts and in areas that are less affluent than those of Costco, due to a result of the strategy implemented by Sam’s when it launched during the 1980s.

During January, Sam’s Club announced abruptly that it was closing 63 clubs, as its stores are called, which equals almost 10% of its overall count, transforming some into centers for distribution to better support its e-commerce push.

It eliminated distinctions in membership between its business and non-business members, as well as lowering membership options from four to three.

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