In its second-largest acquisition, Amazon buys the company for $970 million.
The subscription program mirrors one from Amazon.
Retail chain Target Corp. has launched an online subscription service for baby products. Customers who sign up to schedule recurring deliveries for wipes, diapers, formula or training pants receive free shipping and 5% off their orders if they pay with a Target credit card, the retailer says.
“These essential baby-care items are frequent and consistent purchases for new moms and dads, so we believe offering an online subscription service for these products provides a great value and convenience that will resonate with these guests,” a Target spokesman says. “What we learn from this pilot will help shape our future plans.”
Target’s program, called Target Subscriptions, looks much like competitor Amazon.com Inc.’s “Subscribe and Save” program, which also offers free shipping and discounts on all recurring orders. The discount Amazon gives to subscribers varies depending on what they order, up to a maximum of 15% off for shoppers who order five or more recurring deliveries per month, it says. Amazon launched the program in 2007 for grocery subscriptions. Now shoppers can also buy household, beauty and pet products via Subscribe and Save.
Target is using its stores to offer a service a web-only retailer like Amazon can’t: Customers can return or exchange items in Target stores for free, the spokesman says. Amazon Subscribe and Save purchases follow the retailer’s standard returns policy, which varies by item, according to the terms and conditions.
In other subscription retail news, subscription fashion e-retailer JustFab earlier this month launched its first offline store and healthy snacks subscription e-retailer NatureBox in July raised $8.5 million.
“Subscription services are a great example of how retailers are differentiating their product offering and increasing the lifetime value of customer relationships,” says John Kinsella, senior vice president at e-commerce consultancy FitForCommerce. “The regular contact provides brands increased opportunities for promotions and customer dialogue. The net result can be a terrific return on marketing spend and higher long term customer loyalty.” He adds that he expects more e-retailers will soon begin offering subscription e-commerce to customers.
Target is No. 18 in the Internet Retailer Top 500. Amazon is No. 1.