The Omni-Channel Tussle Between Sam’s Club and Costco

by Sean Ogino |

For business enthusiasts, one of the most interesting and engaging aspects of business is how rivals try to outdo each other. Discounts, offers, better services, enhanced online presence and ease of purchase process…they leave no stone unturned in getting that slight edge over competitors for which every business strives. All these factors apply to two of the biggest giants of the membership-only retail warehouse clubs: Sam’s Club and Costco. Moreover, the relative analysis of their rivalry also has many learning curves for the nascent entrepreneurs who dream to create an empire like these stores.

As far as sales are concerned, Fortune reports that Costco has maintained a lead over Sam’s Club and for that experts are citing better locations and the popular store brands of Costco as the prime reasons.

Costco was recently selected as the better option between the two stores in a Consumer Reports survey. It was rated higher for product quality, return policy flexibility, and range of services. In terms of pricing, Costco generally tries to delay rising prices due to inflation and quickly passes savings along to its customers when prices drop again. However, both Sam’s Club and Costco got low marks for customer service. Furthermore, Business Insider notes that Sam’s Club members can participate in online auctions for electronics. Both retailers.

But Sam’s Club, owned and operated by Walmart, is giving a complete overhaul to its way of functioning. Here’s what they’re doing…

A) Club Pick-Up:

One among many programs which Sam’s Club introduced to stay relevant and customer-friendly is Club Pick-Up. In essence, it’s nothing but a newer and refurnished variant of its in-store pick-up service for online orders. The main reason behind its envision and implementation was to enhance the customer experience by saving valuable time of its members. As a result, its use rose above 46% year-over-year during the holiday quarter. It was perhaps the only reason to smile for Sam’s club amidst the lagged sales.

How It Actually Works

It allows members to build and save shopping lists online for easy reordering. With this, members can inform Sam’s Club that they are on their way to the store. Sam’s Club’s system then will assign parking spots to them from where they can quickly pick up an order. It’s a great time saver, as an average shopping outing can take nearly an hour.  As nobody can ignore mobile nowadays, with the help of mobile check, members can use their mobile app to notify their Sam’s Club when they arrive to pick up their order.

B) Scan-And-Go:

Scan and Go is a faster way to check out. It allows you to scan as you shop, then quickly pay at any register and leave. Besides, it will also keep you aware about how much money you’ll spend before arriving at the counter. In short, it’s an easy way to shop, pay and leave.

How It Actually Works

Scan and Go is easily available on Android OS and iPhones. You will have to open the app when you are in any local store of Sam’s Club. You can scan the barcode of the items which you want to buy. When you are done with the shopping, you will have to follow the instructions in the app. The transaction will be completed and you will be out in no time.

The Results

It’s quite clear that these efforts have yielded solid and measurable benefits. Without even a slightest of doubt, Sam’s Club’s e-commerce is growing with each passing day. 16 million unique visits to the website and sell of 51,000 items can vouch for it. To spur it further, it has also launched daily online deals.  What is interesting to note here is that its rival (Costco) is still away from the functionality which allows members the option of placing orders online which they can procure from a store.  It has definitely given a slight advantage to Sam’s Club in its intense e-commerce battle with Costco. But nothing remains permanent in the ever changing corridors of business; especially when you have mighty competitors.

Costco’s e-commerce sales rose 19% last quarter. That’s precisely why just like any other company, Sam’s Club cannot go into the mode of complacency.

This post was written by Prasad Dhamdhere.



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