Members Only: The Amazon Prime Model

What’s in this article:

  • A look at various membership programs in the works
  • The Amazon membership model is one that some other retailers are now trying to emulate
  • Any business that does intend to introduce a paid membership program needs to analyze and assess if it will improve the bottom line

Amazon Prime Day is set for June this year. Over the years, the special savings event for members only has moved around the calendar and expanded from a single day to a few.

The exclusive savings are one of the membership benefits, though some shoppers would sign on for it just for the free expedited shipping alone, as they order from the site frequently.

This membership model is one that some other retailers are now trying to emulate.

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Going beyond for just $29

For example, in 2018, Bed Bath and Beyond (BBB) rolled out a membership plan it calls Beyond+. For $29 a year, members get 20% off every purchase without having to bring in a coupon and free shipping without reaching the $39 minimum.

They also get 50% off design services, though that’s not really the main benefit that springs to mind for shoppers. The low annual fee makes the BB&B membership the cheapest membership I’ve come across for a retailer.

Drug deal

Even CVS charges more. For either $5 a month or $48 a year, customers of the major drug chain can enroll in the Carepass program that entitles them to the following benefits:

  • 20% off CVS Health brand products
  • Free same-day Rx delivery
  • Free 1 to 2-day shipping
  • $10 promotional reward every month

The math seems to make it clear you’d come out ahead, but that’s only if you really do normally pick things up there every month.  In that way, it’s like the BB&B membership that it only pays for people who buy there often enough to earn back more than they pay in.

CVS rolled out the program nationwide in August 2019. It’s hard to tell how much impact it has had on the business. Sales were higher in 2020, but that is only to be expected during a year defined by the pandemic.

The cost of Prime

Walmart launched its membership program called Walmart+ in  September 2020. Priced at $12.95 per month or $98 a month, the cost approximates that of Amazon’s Prime. Also, like Amazon, it offers free trial periods. But the benefits extend beyond standard free shipping to include same-day shipping for perishable groceries. Based on the few times I treated myself to grocery delivery, I can attest to that being a huge time-saver.

Walmart even does the math for those considering it by adding up not just how much money but how much time you could end up saving with the membership service:

There are also benefits for those who wish to shop in-store. Walmart offers a Mobile scan & Go, which allows shoppers to scan items while shopping instead of only doing so at checkout. Payment comes off the app directly from the debit or credit card that the user entered into it and then scans a QR code at a self-checkout.

This mobile scanning form of technology is not unique to Walmart, though. Other stores do have it available to their customers without having to purchase a membership. For example, Stop & Shop offers its SCAN IT! Mobile app for free. So, Walmart should possibly consider extending that app to all shoppers who wish to use it, as well. But still, people who drive a lot may also appreciate the savings of up to 5¢ a gallon at Walmart gas stations.

Membership programs in the works

A search for retailer membership programs will bring up some that have come and gone. When it comes to the Premier Membership program from Newegg, the story gets a bit more complicated. The online seller of electronics, appliances and other products offered membership for $49.99 per year, $29.99 for six months, or $19.99 for three months. Students would get a special discounted rate of just $30 annually.

The benefits included expedited shipping and free 30-day returns. Members also got early access to the site’s sales and members-only discounts. On top of that, there was a special customer service helpline reserved for members only.

But if you now check for the details about the membership program on the site, it becomes clear that it wasn’t working out quite the way Newegg wanted it to. Under “Premier updates,” you find this notice:

Newegg is canceling the Premier Membership and neither accepting new members nor renewals. However, we will be launching a completely new loyalty program we think will benefit more of our shoppers in the coming months, so stay tuned! If you have any questions about your membership, please reach out to customer service, and they will be happy to help.

At this point, all memberships have come to an end by the end of 2019, as per the Newegg communication to its members. Now nearly 18 months later, Newegg still has failed to say what – if anything – will be taking its place.

What we can conclude from this is that many retailers try to follow in the footsteps of Amazon, but not all are cut out for a paid membership program. Perhaps when it really pays off for customers, the sellers discover the costs to them are not worth the increase in sales and loyalty. So, any business that does intend to introduce a paid membership program really needs to analyze and assess if it will improve the bottom line.

The post Members Only: The Amazon Prime Model appeared first on Post Funnel.

tomas

Online enterprenuer. Lean leadership consultant.

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