Photo: Sam’s Club
Will free, same-day pickup give Sam’s Club the edge it has been looking for over Costco?
Sam’s Club, the perennial runner-up against Costco in the competition for warehouse club members and sales, earlier this week announced the chainwide launch of a free, same-day online order pickup program that management believes will bring added convenience to the lives (private and business) of its members. Will this move finally give Sam’s the leg up it has sought over Costco for years?
The new pickup program allows members to place orders through SamsClub.com or through the retailer’s mobile app. There is no minimum order, although Sam’s is capping the number of items in individual orders at 15. Members can order products from a wide variety of categories, including alcohol, consumer electronics, fresh produce, meat, paper goods and more.
Some clubs offer members the option of picking up orders at designated curbside locations or drive-through lanes. Orders can typically be picked up in four hours or less after 10:00 a.m. on weekdays and 9:00 a.m. on weekends. The club’s Plus members have an early pickup option: between 7:00 a.m. – 10:00 a.m. Monday-Friday.
“Same Day Pickup is just one of the many ways we are making shopping at Sam’s Club more convenient for our members,” said Dani Adnan, sr. business and product manager, Sam’s Club Pickup, in a statement. “We began testing Same Day Club Pickup last summer and received great feedback from our members, so we are excited to be able to rollout this service to members across the country.”
With its new option, Sam’s now offers members across all its clubs the option of picking up online orders or having them delivered to their homes and/or businesses. The chain rolled out Instacart delivery across its nearly 600 U.S. clubs last month. Alcohol delivery is available in select states.
Discussion Questions
DISCUSSION QUESTIONS: Do you expect Sam’s free, same-day pickup program to prove popular with existing members while helping to recruit new ones? Do you see free pickup, particularly for Plus members, helping Sam’s expand the number of businesses that join the club?
Poll
BrainTrust
Lauren Goldberg
Principal, LSG Marketing Solutions
Ron Margulis
Managing Director, RAM Communications
Bluntly, no. The appeal of Costco is multifaceted, and has little to do with digital. So Sam’s Club focusing on pickup, while worthy, isn’t going to give them an edge. Now if they developed own-label products half has good as Costco’s Kirkland, they might be on to something…
I’m with you Neil! Sams doesn’t hold a candle to Costco when it comes to products and services and this will not even make a dent. For my 2 cents!
Convenience is the name of the game, so this will be beneficial for Sam’s — but only until Costco offers the same service. The game of retail is based on multiple points of parity and points of differentiation. I don’t see this as being a long-term, sustainable point of difference that others can’t (or won’t) offer.
Is this news? This is BOPIS. So what that it’s a “discount club” and not a “retailer.” In reality, there’s no substantial difference between the two and BOPIS is now a permanent fixture of retail so the same is to be expected of clubs. It’s more an admission that discount clubs are just as bad as retailers at not knowing how to skate to where the puck is going.
Same-day pickup is becoming like Wi-Fi was 10 years ago, but now table stakes.
BJ’s has a longer way to go before it can take away market share from Costco. Same-day pickup is not the biggest attraction to consumers in this space.
Most consumers now expect BOPIS as an expected service from most retailers and this is a smart move from Sam’s Club. It may not be enough to make loyal Costco customers to switch to Sam’s Club, but it will help increase the loyalty of Sam’s Club customers. As a Costco fan, I hope they offer this service soon.
This won’t help Sam’s attract shoppers away from Costco. Sam’s already has an advantage over Costco with the proximity of many of its locations. In fact, that’s probably its main advantage – shoppers aren’t driving 10 miles to Costco if there’s a Sam’s down the street. This is a nice to have for those shoppers, not a need to have.
You’re late. But still, welcome to the table – you’ll be dealt in the next hand…
I think it will make a difference in the business segment. I spent many years in the office supply industry and the warehouse channel was already starting to steal market share. I think the convenience will be more of a driver to acquire and retain corporate accounts.
From a consumer point of view, I don’t believe this will be a significant competitive threat against Costco. Costco has a stronger brand based on it’s private label products and services.
Half the fun of shopping at Costco and Sam’s Club is going to the store because you never know what you will find once you are there.
Now that everyone is doing fast delivery it’s no longer special, it’s expected.
While adding BOPIS will appeal to many Sam’s Club shoppers, I don’t think this will impact Sam’s Club’s ability to compete with Costco. In fact (and I know some will disagree) I don’t think that Sam’s Club is all that competitive with Costco anyway. Their target customers are different, their assortments reflect those differences, and Costco is far more invested in the warehouse experience than Sam’s Club. Digital commerce is still an afterthought at Costco as the warehouse experience, including the “treasure hunt” aspect of visiting a store, is what engenders loyalty and ever-increasing average order sizes.
I’m sure Sam’s Club BOPIS will prove popular with existing members. But it’s something that Costco can easily duplicate, so I don’t assume it will give Sam’s Club an edge, or at least a long-lasting one. And I agree with previous comments that Costco’s appeal isn’t primarily about increased convenience. On a side note, I have some concerns about the 15-item cap.
I just don’t see this as a competitive advantage to lure customers away. As others from the BrainTrust have commented, this is now a given in the industry.
To another more mechanical point – I imagine the AOV for a general Sam’s Club/Costco order is high and items-per-ticket is high as well. If they’re capping the lines per order at 15, then I see this as a potential disconnect and a bad shopping experience. What happens when you spend 20 minutes to purchase the 15 and want the 16th item? Disappointing.
Operationally, this could be a disaster. Average order pick times on a store with 10,000 square feet or less is around four to five minutes for a two-line order. Here we could potentially average eight to 10 lines an order, and the store format is much larger (and the inventory velocity, especially on a Saturday/Sunday, for example, could be substantial, which would lead to more shorted order lines). Just leaves me wondering how easy this will be to consistently maintain high fill-rates. Couldn’t imagine they ever get this down to a standard two-hour pickup window (which points to the speed part of the top two reasons, those being speed and convenience). All that said, Walmart’s pickup and curbside offerings seem to be working, albeit different order profiles…
A lot to say about nothing. This will not change the game and will not increase loyalty or give a non-member a reason to become a member.
Sam’s and Costco overlap, but the focus of both businesses is different. Sam’s targets the small business customer first, the family consumer second. Costco is focused on the upper middle class family. Patterns of customer use to both chains tends to be different. Sam’s is trying to facilitate that small business customer who has a different time pressure and is much more focused on expense management. The order today, pick-up today is Sam’s innovating to meet small business needs.
This won’t lower acquisition costs, but it has already proven to be popular enough with existing members to launch it nationwide. For small business, this convenience can be powerful — especially those who use Sam’s club as a primary supplier. Reduces time for pickup, allowing delivery to their own SMB customers faster.
As for competition, the experts on this thread have already stated there will be little movement on the needle. I would argue that the offering serves to lock in the existing customer base and improve loyalty.
Most important here is that Sam’s is staying true to their customer centric focus- offering conveniences that customers have asked for.
No company is ever going to get an edge over its competitor(s) by doing something the competitor(s) can easily imitate.
This is another value-add to the customer/member in the form of convenience. Sam’s (and every other retailer) has to come up with innovative or new ways to compete and offer value, and this one is simple: it’s a convenience play.
To attract Costco customers, Sam’s Club will need to move closer to Costco’s business model and do it better. But changing your DNA is hard to do. Remember when Walmart tried to be more upscale to compete with Target? Easier said than done.
While this may initially incentivize shoppers to become Sam’s Club members (or become more loyal), effectively this will be but a drop in the pond and have little long term impact. Consumer’s will continue to value convenience first and will opt to pay more for a same-day delivery Costco offers via Instacart over same-day pickup.
Sam’s Club has every product online for sale, with pricing. BOPIS works very well, which for me is quick and they palletize my order, so it gets loaded from their forklift right into my van.
All that being said, Costco for consumers who shop the store is a much better place to find amazing high quality products, and if you like fighting crowds, Costco is the place to be. Costco is well behind on online ordering for their food stuff, and prices are not listed online either but that being said, they still outshine Sam’s at store level, and the customers who shop their have more disposable income, which leads to huge transactions. Costco has friendlier associates as well, and that means a lot to me.