Executive Briefings

Sam's Club, Vying With Costco and Amazon, Offers Free Shipping to Premium Members

Sam's Club is offering free shipping for premium members and simplifying its membership tiers.

On Wednesday the warehouse club, owned by Wal-Mart Inc., began offering free shipping on online orders for Plus members on 95 percent of the items it sells. Most of its shipping prices previously were based on the item's size and weight, the shipping method and the delivery address.

Free shipping and faster delivery have been key areas as retailers try to compete with e-commerce leader Amazon.com Inc. and adapt to shoppers' shift online. In 2016, Amazon's product sales totaled $94.7bn, according to research firm EMarketer Inc. Analysts have said the Seattle firm's Prime membership — which costs $99 per year and provides free shipping on purchases, as well as access to Prime Video, unlimited music streaming and other perks — also encourages customers to stick with Amazon for online buying.

Amazon also is reportedly planning a new service to pick up packages from businesses and deliver them to customers. And late last year, Target Corp. bought grocery delivery startup Shipt to speed up same-day deliveries.

As part of its changes, Sam's Club is converting its three membership plans into two. Sam's Plus will still carry a $100 annual fee, while its Business and Savings plans will be turned into Sam's Club memberships with an annual fee of $45. The company is trying to better compete with rival Costco Wholesale Corp. by focusing on the more affluent customer. It has added more fresh produce and other higher-quality products.

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On Wednesday the warehouse club, owned by Wal-Mart Inc., began offering free shipping on online orders for Plus members on 95 percent of the items it sells. Most of its shipping prices previously were based on the item's size and weight, the shipping method and the delivery address.

Free shipping and faster delivery have been key areas as retailers try to compete with e-commerce leader Amazon.com Inc. and adapt to shoppers' shift online. In 2016, Amazon's product sales totaled $94.7bn, according to research firm EMarketer Inc. Analysts have said the Seattle firm's Prime membership — which costs $99 per year and provides free shipping on purchases, as well as access to Prime Video, unlimited music streaming and other perks — also encourages customers to stick with Amazon for online buying.

Amazon also is reportedly planning a new service to pick up packages from businesses and deliver them to customers. And late last year, Target Corp. bought grocery delivery startup Shipt to speed up same-day deliveries.

As part of its changes, Sam's Club is converting its three membership plans into two. Sam's Plus will still carry a $100 annual fee, while its Business and Savings plans will be turned into Sam's Club memberships with an annual fee of $45. The company is trying to better compete with rival Costco Wholesale Corp. by focusing on the more affluent customer. It has added more fresh produce and other higher-quality products.

Read full article