Amazon not only sold $2.5 billion worth of goods, it introduced Prime members to new services. How should rivals compete in 2017?
Shoppers will sign up online to receive a surprise package of items.
Wal-Mart Stores Inc. plans to start sending monthly shipments of food and artisanal items to consumers as part of a test of a service called “Goodies.” The paid subscription service would put the chain in the company of Amazon.com Inc. and other e-retailers, many of them focused on fashion apparel and beauty products, that operate similar programs.
The test of Goodies is set to begin in about a month, according to comments made this week by Neil Ashe, president and CEO of Wal-Mart global e-commerce, during a corporate meeting in Arkansas. Consumers who sign up online would receive monthly shipments of items that would remain a surprise until the box is opened. The retail chain will select the products in the shipments and monitor the popularity of shipped items by tracking reorders. He said that in the future, marketers might pay to include their products in the monthly shipments.
Ashe reportedly said the program would be similar to the one operated by e-retailer Birchbox Inc., which sends cosmetics to consumers who subscribe online. Birchbox offers men’s and women’s subscriptions; women, for instance, can pay $10 per month for four to five hand-picked samples of hair, makeup and skincare products.
Neither Ashe nor a WalMart spokeswoman contacted today detailed how much the Goodies program would charge consumers for subscriptions, nor other details of how the program would work. She also failed to note whether shoppers will sign up for the subscriptions online. However, the spokeswoman says that Joel Anderson, president and CEO of Walmart.com U.S., “will lightly touch upon” Goodies next week at the Internet Retailer Conference and Exhibition 2012 during his session, which is entitled “Creating innovation through the next generation of retail.”
Walmart.com is No. 4 in the Internet Retailer Top 500 Guide.
Besides Birchbox, Amazon, No. 1 in the Top 500 Guide, also runs a retail subscription program, focused on everyday household products such as baby goods, laundry supplies and coffee pods. Consumers who sign up for “Subscribe & Save” schedule the frequency of their deliveries and how many items they want to receive, with payments billed automatically to the credit card the shopper has on file with Amazon.
Meanwhile, Citrus Lane, a subscription e-retailer that sells baby products, recently raised $5 million. That funding announcement came just as shoes and accessories e-retailer JustFabulous—usually called JustFab by those in the know—said it would branch out from subscriptions and give shoppers the chance to pay a premium to purchase items a la carte on JustFab.com.
Among the most noteworthy parts of the Wal-Mart announcement is the chain’s use of “artisanal” to describe the products it will ship to subscribers, says Nikki Baird, managing partner at research and advisory firm Retail Systems Research LLC. She says the word suggests that Wal-Mart is trying to lure the same types of consumers who buy relatively expensive items from other subscription e-retailers. “It would be an interesting way to identify customers who are interested in higher-end products,” she says. “Wal-Mart has long been trying to attract and retain those customers.”
But her RSR colleague, Paula Rosenblum, said the Goodies experiment might shift Wal-Mart’s focus in the wrong direction. “If I were Wal-Mart, I’d focus on my core customer and stop messing around up-market,” she says. “It has started to lose bits and pieces of its core customer’s basket to dollar stores. That’s a bigger concern to me than continual attempts to find higher-end consumers.”