Market
By Christopher M. Uhl
I'm a huge fan of Costco. Honestly, I spend most of my money either at Costco or Amazon, and my wife handles it all. My best Costco experience? I went in for paper towels and left $350 lighter with a trunk full of stuff. You can't just buy one or two things at Costco. Maybe that's what Sam's Club is aiming for with their new changes, trying to foster the same kind of customer loyalty.
I watched a documentary about Costco, and their customers are incredibly loyal. The company makes most of its money through memberships and sticks to its core values, like never changing the price of their $1.50 hot dog. Everything in the store, especially Kirkland brand items, is as good or better than the name brand beside it. Costco even pushes manufacturers to make Kirkland products better than their own. It's crazy, but it works.
Now, Sam's Club is shaking things up for its Plus members. Starting August 19th, free shipping will only be available for orders over $50. Otherwise, there's an $8 flat rate fee, and some categories are excluded. This change has upset a lot of members. It's a bit like what Amazon Prime has done recently—adding ads to Prime Video and extending shipping times unless you pay extra. It's frustrating to see benefits reduced or removed altogether.
The question is, how will this impact Sam's Club? You can't just take something away and expect customers to be happy. People don't want to spend more or deal with added ads. It's likely to backfire, pushing more people to Costco, where the membership experience is so good that even the gas lines are six cars deep.
Walmart, Sam's Club's parent company, has been doing well, with its stock rising from around $40 a share in June 2022 to about $60 a share now. But recent changes at Sam's Club might hurt their bottom line. Capital efficiency is crucial, and while Costco also charges for shipping, their strong customer loyalty and unbeatable deals (hello, $1.50 hot dog!) keep them ahead.
