Sam’s Club Upping Its E-Commerce Efforts

Adding fulfillment centers and free shipping
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Adding fulfillment centers and free shipping
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Sam's Club is finally catching the digital wave that sister chain Walmart has been riding of late.

In a corporate blog post, CEO Jamie Iannone outlined two e-tail initiatives designed to give the No. 2 warehouse club more sway in its market share battles with channel leader Costco and online leviathan Amazon.

Most immediate is a new perk: free shipping on most items sold online with no minimum purchase required. The service, which launched yesterday, is limited to “Plus”-tier members, who pay an extra $55 annually over the basic $45 membership fee. The extra scratch provides cash-back rewards, extended hours, and pharmacy and optical discounts. (A third membership tier was dropped to help simplify Sam’s Club’s offerings.)

The other e-commerce element, announced last month, comes rather late in the game: the chain’s first dedicate fulfillment center for online orders. The facility is being built in a former Sam’s Club store in Memphis, Tenn., and is expected to open this spring.

“Our Memphis center will teach us a lot as we build out this new e-commerce supply chain,” said Iannone, who joined in 2014 from Barnes & Noble, where he honchoed the Nook e-reader business as digital products president.

Sam’s Club is already eyeing additional locations in Texas, Central Florida, the Mid-Atlantic, Southern California, Chicagoland and the Northeast, he said, with an accelerated buildout expected to begin in the back-half of the year. The move is designed to speed shipments of online orders, as Amazon and other e-tailers continue to close the delivery window.

See: Amazon Expands Same-Day Delivery

Plans call for up to a dozen fulfillment centers in total, all former Sam’s Club stores, to be chosen from among the 63 locations that are being shuttered this quarter. The closings represent about 10 percent of Sam’s store base, and will cost about 10,000 employees their jobs.

On a conference call, Sam’s Club executives said the changes are part of an overarching plan to close underperforming stores and focus on the company’s core customer – a suburban household with a low three-figure income that may or may not run a small business, the New York Times reported.


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