Watch out Costco and Sam’s Club – Amazon and Target are offering regularly scheduled subscription delivery services for such goods as baby products, beauty goods, pet supplies, home office supplies and more. Not only are these two companies offering this but there are also start-ups entering this subscription-based service. Could this be the end of warehouse clubs?
Many companies have attempted this business model but ran into trouble. For example, Walmart introduced Goodies.co; a monthly subscription-based snack service but after only a few months closed it.
To expand its online presence, Target introduced its subscription service in September, 2013 with about 150 baby products. Since then, the retailer expanded the program to almost 1,600 items. It allows customers to schedule shipments in four, six, eight, 10 and 12-week installments. Before each subscription order goes out, customers receive an e-mail from Target as a reminder; in case sizes or quantities need to be updated. Most of its orders are sent via United Parcel Service Inc.
Amazon’s Subscribe & Save service offers a one month up to six month schedule delivery service. Similarly to Target, Amazon will send an e-mail to allow customers to make updates to their subscription as necessary.
For both Target and Amazon, delivery is free.
Meanwhile, start-up companies are also stepping into the subscription delivery service. Boxed.com offers a mobile app for customers to order wholesale goods and have them delivered to their front door. Boxed actually fulfills orders from its own warehouse with delivery within 2 days and free for orders over $75.00.
While Target and Amazon will likely compete on price, start-up company ePantry targets a specific clientele and provides environmentally-friendly goods. It offers a selection of sustainable household products that are automatically shipped to the customer on a regular schedule.
As the competition increases, Costco and Sam’s Club are fighting back. Sam’s Club is focusing on electronics while Costco is partnering with Google Express in San Francisco to experiment with same-day delivery.
Still, the pressure will continue for Costco and Sam’s Club as they will face mounting competition particularly as Amazon, Target and others expand products and additional services through their online subscription services. Perhaps these two warehouse clubs will consider an online subscription delivery service that can effectively compete against the likes of Amazon, Target and other such service offerings.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)