Going Beyond “Subscription” Helps Fight Attrition
To Each Their Own
We live in a world where artificial minds can think for us, technology-empowered vehicles can drive for us, and microscopic medicine can cure our diseases. The world has never been more transformative, and we’re only beginning to understand the scope and scale of these revolutions. We’re still human beings, but what it means to live as a human seems to have been redefined by fateful forces that linger on the periphery of what we can control.
Perhaps, then, it’s little surprise that the most attractive promises in retail are poised to bring us back this control. Think about it this way: controlling convenience and accessing newfound efficiency have become the cornerstones of our ever-evolving customer landscape. No longer do we need to aimlessly wander the aisles of brick-and-mortar establishments, sifting through piles of products to find the perfect item. Instead, we are now immersed in a digital marketplace, where progressive retail platforms cater to our every whim and desire, all with just a few clicks. These services, much like the technological marvels that surround us, have become integral to our lives, reshaping our relationship with consumption and redefining the very nature of retail.
Clash of the Kings
The retail landscape is more nuanced than ever before, with a diverse plethora of “micro” services catering to unique customer needs and accommodating targeted behaviors. The truth is, though, a few of these platforms rise above the rest. And right now, Amazon Prime, Walmart+, and Target Circle are fascinating case studies.
True, these platforms differ in their offerings, their competitive position, and the audiences they appeal to. But they share one thing in common: a mission to transcend the retail landscape and create new shopping environments where loyalty can thrive.
The captivating part lies in how these brand titans tailor their tactics to shape their status and direction. Sure, their bottom-line goals might align; at the end of the day, attracting the most shoppers and racking up the highest gross profits will satisfy stakeholders and embolden investors. But their approaches differ - sometimes subtly, sometimes radically. That’s because superior strategic intelligence allows organizations to hone in on customer distinctions, servicing attenuated idiosyncrasies with proprietary blends of competitive advantages and marketing messages.
If this sounds complicated, it can be - but it doesn’t have to be. So let’s make things simple and dive into three progressive retail platforms - Amazon Prime, Walmart+, and Target Circle - and examine what makes them tick:
What’s left to say about the “grandaddy” of progressive retail platforms? Well, a lot. Over the past 17 years (the premium platform debuted in 2005), a great deal of evolution has taken place, shifting the motivation of the brand and adapting their offerings to dynamic customer behaviors.
Amazon Prime membership started as a fairly basic service. Members were given unlimited 2-day delivery on over 1 million in-stock items, for an annual subscription fee of $79. In fact, this 2-day delivery promise was quite innovative for the time, and bringing large volumes of diverse (and often niche offerings) quickly to customers set it apart from other available retail services.
It may be surprising to learn that member growth was slow during these formative year. Amazon Prime started off slow at first, with limited membership growth observed. In fact, it wasn’t until 2011 Prime started to explode in popularity, finally seeing substantial growth year-over-year. It now has more than 200 million members across 23 countries. Revenue near the end of 2022 was reported at $502 billion, with annual revenue growth averaging 22% since 2014.
Luckily for customers, the benefits have blossomed as rapidly as the numbers. Amazon Prime is feature-rich and packed with perks. Presently, Prime members delight in a dazzling array of goodies, including complimentary expedited shipping on most items (the “two-day” promise is now often a 24-hour delivery), Prime Video, Prime Music, Prime Reading, with more benefits constantly being added. Additionally, Amazon has recently introduced a novel Prime scheme that targets Whole Foods customers. The program, named Prime Now, provides customers with free two-hour delivery on Whole Foods purchases. The cost of these benefits? Customers can tier themselves into two options: a $9.99 a month plan, or a $99 a year flat fee for those considering frequent utilization. An additional student option basically halves these fees for qualifying individuals.
Walmart+ Here’s the thing about Walmart: it conquered physical brick and mortar spaces like no other business really could. And while there were certainly other pioneering businesses that preceded to lay some fundamental foundations, Walmart unambiguously transformed physical retail and developed a strikingly sticky brand fingerprint in this space.
What really challenged it was the online world.
The problem had mounted for years. The company’s online sales were growing, but the relative picture always felt unfinished. Around the time Walmart started closing Sam's Club stores and experimented with premium two-day shipping as a direct challenge to Amazon, growth projections turned out to be way off the mark, with updated metrics at only a fraction of previous expectations.
Flash forward a few years, and we have Walmart+: the definitive response to a stumbling strategy. Walmart's vast brick-and-mortar footprint, coupled with an unwavering commitment to customer satisfaction, enabled the company to develop a well-calibrated strategy poised to capture a significant share of the burgeoning online shopping market. The pandemic served as a catalyst for these events, accelerating general transitions to e-commerce and intensifying the demand for fast, reliable, and affordable delivery services.
Leveraging its extensive distribution network and the synergy between its physical and digital assets, Walmart+ crafts a value proposition that successfully challenges Amazon Prime's dominance. Strategic acquisitions and partnerships further fortify Walmart's capabilities in data analytics, supportive AI, and supply chain management. This well-rounded approach, characterized by a blend of formal innovation and casual adaptability, positions Walmart+ as a worthy adversary in the digital commerce arena. On paper, Walmart+ appears to be a formidable competitor to Amazon Prime. Though the membership numbers don’t quite stack up to Amazon’s monstrous base (11.5 million members for Walmart+, equating to 25% of the retailer’s online shoppers), the brand boldly touts that members can save up to $1,300 per year. After a 30-day free trial, membership costs $12.95 per month. The core platform benefits are aligned around speedy shipping, free local deliveries, and waived shipping costs with no minimum order. But program membership gives a lot more on top of these basics; perks like fuel savings supported by an ExxonMobil partnership, a Paramount+ content subscription, automatic enrollment in Walmart Rewards, mobile scan & go, exclusive access to special seasonal promotions, and streamlined returns all work together tactically as an alluring customer-centric ecosystem.
These top dogs don’t run the pack alone. There’s an intriguing diversity of progressive retail platforms out there, some from small start-ups, some from big brands.
Target certainly isn’t a small start-up. But Target Circle isn’t exactly a direct competitor to Walmart+ or Amazon Prime, either. For example, membership in Target Circle is free, unlike the former’s premium paid packages. The program is well integrated into existing program; anyone who already has a Target.com, Cartwheel, or RedCard account is automatically enrolled. If customers don't have one of those accounts, they can join by simply creating a Target.com account, or providing a phone number at check out. And instead of an online marketplace with shipping, Target+ centers around in-store loyalty.
It’s a more traditional program that intends to fight Amazon Prime and Walmart+ on its own turf, an ingenious strategy that might have substantial merit. Target is using what it already has to change the rules. Its in-store and curbside pickup are faster than one-day shipping and, if that's not fast enough, Target offers same-day delivery through Shipt, often in one hour. That service costs $99 per year, compared to Amazon Prime's $119 annual membership. Target circle benefits are attractive, and compel customer behaviors through a mix of traditional loyalty perks paired with progressive ad-ons that modern digital natives have come to expect:
- Circle members earn 1 percent on every Target purchase, redeemable on later purchases. RedCard members who use their credit or debit card won't earn the 1 percent back but will still save 5 percent on purchases.
- Target app in-store integrations help streamline rewards accumulation.
- Exclusive deals and promotions are tailored to shopping behaviors (based on both category and volume).
- An innovative non-profit collaboration scheme that enables customers to “vote” on community-based initiatives every time they make a transaction.
What A Time To Buy
In the ever-changing world of retail, more and more players are vying for our attention and loyalty. Every novel platform, with its unique offerings and strategies, should be striving to redefine the way we shop and engage. Customers will continue to embrace the power of technology, the convenience of digital marketplaces, the insatiability of content consumption, all to be caught in a delicate balance between true progress and the immutable essence of patronage.
It's not just about making a purchase anymore; it's about the underlying experience and the sense of connection we develop with these retail platforms. But this rhetoric has been known by marketers for ages now. The great unknown may be what’s next.
As of writing, none of these progressive retail platforms leverage explicit AI interfaces; none of them feature augmented reality experiences for product trials, nor do they incorporate real-time interactions with other members in virtual social communities. These are things that will come, sooner than later. So perhaps the future of retail isn’t here just yet - but one day it will be.