What Exactly Are You Buying From Your E-tailer's Membership Program?

Online shopping just got a whole lot more convenient. Within the last week, both Amazon and Walmart announced the piloting of two new services: Amazon is experimenting with same-day delivery in select cities and Walmart will be testing its first subscription-based shipping program. The latter will help Walmart (a brand that has always prided itself on its everyday low-price guarantees) compete with the already uber-convenient Amazon Prime, offering free three-day shipping on approximately 15% of the products within the retailer’s digital catalogue. And while retailers like Walmart have always had a leg-up at understanding the nuances of omnichannel, more than a few CPG organizations will be left scratching their heads trying to keep up with the game their customers are competing at.

What does this mean for consumers?

With subscription-based e-commerce becoming more commonplace, consumers are likely to start over-indexing on spend around the e-tailer memberships they pay for, whether it is because they’re already paying for the service or because they’re actual fans of the e-tailer’s offerings. Memberships will influence choice for digital commerce the same way locations and footprints drove bricks-and-mortar’s store selection. Studies are already showing how Amazon Prime members not only spend more per year, but can end up spending more on the products they purchase, leading us to believe that digital retailers like Amazon don’t need to compete on price to win share.



What does this mean for retailers?

The industry as a whole might be entering a race for subscription sign-ups. If price is no longer as motivating a factor for consumers’ purchasing preference, retailers will begin to focus on the ancillary offerings within their subscription programs. As membership rates increase and programs multiply, benefits like streaming services or discounts will turn e-tailing into an industry that might look more like that of credit cards (and the fight for top-of-wallet) rather than the best places to shop.

What does this mean for CPG marketers?

Apart from the fact that omnichannel investments will be eating more of their overall marketing budgets, what else is out there? For one, both customers and brand marketers will need to work together and use their combined knowledge to inform their omnichannel strategies. Customers like Amazon and Walmart have become the research and data mines that shopper marketing has always yearned for (affordably). Add-to-basket marketing will see stark competition among both e-tailer and third-party sites alike as consumers drop terabytes of data both in and out of retailers’ shopping experiences. Marketers will need to consider the shopping journey as “always on” as both customer and brand teams begin to inform one another’s disciplines. 

As the middle of the digital/physical road becomes a much more fertile ground for consumers, CPG marketers and retailers alike will be forced to make tough decisions, potentially even divest from the traditional retail programs they have spent years building and understanding. If online shopping benefits like “free shipping” and ancillary offers become ubiquitous, retailers will need to find new grounds on which to differentiate their services, giving way to branding and positioning opportunities. 

What will continue to be paramount, however, is understanding how consumers evaluate and choose brands throughout their shopping experience. And that’s a story CPG marketers (should) know all too well.

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