Walmart’s unit, Sam’s Club, has announced that the membership structure of its customers will be consolidated. The warehouse chain will also enhance its online retail offerings by launching additional e-commerce warehouses as well as providing free shipping.
Last month Sam’s Club shuttered 63 stores which is around 10% of its total number of stores. Additionally close to 10,000 employees were laid off following a profitability review. This was the most severe round of layoffs that the warehouse chain has ever conducted since it was started more than three decades ago.
The moves have been initiated by John Furner, the new chief executive officer of Sam’s Club, in a bid to rejuvenate a business which has underperformed compared to its parent company Walmart as well as competitors such as Costco Wholesale.
Two membership options
While Sam’s Club previously had three membership options it will now have two. A Sam’s Club membership will cost $45 per year while Sam’s Plus membership will cost $100 annually.
According to the chief executive officer of SamsClub.com, Jamie Iannone, Sam’s Plus members will get free shipping on 95% of items the warehouse chain sells online. There will be no conditions such as the minimum they need to spend on an order.
At the moment Sam’s Club depends on the supply chain network of Walmart in order to make e-commerce deliveries. However the warehouse chain intends to launch its first online retail fulfilment center. This will be in Memphis, Tennessee. The first package from this fulfilment center is expected to be shipped in spring. Sam’s Club is also considering putting up fulfilment centers in other places such as the Northeast, the Mid-Atlantic, Chicago, Southern California, Central Florida and Texas.
Internal cloud network
The overhaul of Sam’s Club membership structure comes in the wake Walmart’s investment in an internal cloud network beginning to pay off. With cloud-powered big data Walmart now has the capacity to stay competitive with regards to pricing. Big data is also allowing Walmart to get better at targeting shoppers with improved services and more customized offers.
According to company executives Walmart is for instance using cloud-powered big data to restock the items that customers frequently order through voice shopping devices. In future Walmart is expected to commercialize the excess data center capacity.
“Walmart is very good at following Amazon’s innovations. Now they must find a way to monetize the cloud business they are building the way AWS did,” Sizemore Capital Management’s founder, Charles Sizemore, said.