Retailers are launching membership programs to compete with Amazon | Modern Retail

Memberships are starting to replace loyalty programs, as retailers look for more lucrative ways to squeeze recurring revenue out of their existing customers.

Best Buy announced that it was testing out a new membership program, which would cost customers $199.99 per year. In exchange, they would get free shipping, unlimited service from Geek Squad, and access to exclusive deals. In addition to Best Buy, Urban Outfitters Inc. also announced last month that it was testing out a new membership program. And last year Walmart launched Walmart+, its answer to Amazon’s $119 per year Prime membership. Walmart+ members pay $98 a year for access to free same-day grocery delivery, and free shipping on orders $35 and over.

What’s driving the rise of membership programs, experts say, is that retailers believe memberships can help them build tens of millions or even hundreds of millions of dollars in recurring revenue. While all of these retailers have long had their own branded credit cards and/or free loyalty programs, what’s particularly appealing about memberships is the fact people pay a fee every year or every month, so that the retailer automatically gets revenue from them even if they don’t buy from that retailer every month.

Source: Retailers are launching membership programs to compete with Amazon