Sam's Club on Wednesday announced a slew of changes to its membership programs, including no-minimum free shipping for all Sam's plus members on 95% of items. The membership will still be priced at $100 annually, and depending on where a member lives, it aims to deliver products to the majority of customers within one or two days, executives said on a conference call to announce the changes.
The company is also consolidating Sam's business and Sam's savings membership programs into one track, still priced at $45 a year, and extending the "add-on" ability so members can give memberships to family, friends or employees for $40.
On a media call Tuesday afternoon, Sam's Club CEO John Furner and Samsclub.com 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. The first converted property will open in Memphis, TN by the end of March. The company is also considering converting locations in Texas, central Florida, the Mid-Atlantic, Chicago area, Southern California and somewhere in the northeast.
It's clearer than ever that free shipping is table stakes in a world where customers are accustomed to Amazon's free two-day shipping promise. But when Sam's Club executives were asked by reporters how much the move to roll out free shipping was related to competing with Amazon, they said the new perk was conceived after a year-long process of defining who the core customer is and what they care about.
In the end, it came down to three things: quality, value and time.
With free shipping and no minimum purchases, Sam's Club is working on the time element, but only for its most loyal customers. By comparison, an Amazon Prime membership that allows for free two-day shipping is $99 a year, and while the company bleeds cash on the logistics of the promise, it's become a huge customer acquisition tool. According to a report from data-driven marketing firm Epsilon, 88% of Amazon shoppers said the promise of free shipping is what compels them to shop at the retailer.
Sam's Club's new perks are part of an overall transformation of the business, which is focused on reducing complexities, "right sizing" its store fleet and improving features like scan-and-go, pickup operations, fresh delivery and digital tools that reorder essentials.
The opening of e-commerce fulfillment centers will be key to making free and fast shipping a reality. While executives gave few details on the exact locations of those centers, aside from the first slated to open in Memphis, more details will emerge within the next six weeks. At that time, it will also become clearer how many employees affected by the store layoffs will begin working at the fulfillment centers.