Retailers are competing with Amazon Prime with new subscription services

Walmart and Target are stepping up their game to compete with Amazon Prime. Walmart Plus has announced a new on-demand delivery program launching Sunday. And Target is launching its own version of Amazon Prime in April called Target Circle 360. But is there room for another subscription?

Raghu Iyengar feels oversubscribed.

“Netflix, Amazon Prime, Disney+. And then we also have Sling for watching cricket. And then we have the razor and grocery delivery and all that. So I think over all of this I would easily say 10-plus,” he said.

Ten-plus subscriptions isn’t that bad after all. Iyengar, professor of marketing at the Wharton School of the University of Pennsylvania, said the average American has 12. But that doesn’t leave much room for another plan, like Target Circle 360.

“Who are the customers willing to pay for an Amazon Prime subscription plus a Target subscription? That could be a very narrow list,” he said.

Narrow, but not non-existent. Diana Smith, associate director of retail at Mintel, said nearly 80% of Americans have access to an Amazon Prime subscription. And more than 30% of Amazon Prime members are also Walmart Plus members. That means there’s room for Target to tap into its loyal customer base. But Smith said Target will catch up.

“I think Target is coming in a little late. They are going to have an uphill battle with this,” she said.

Target Circle 360 ​​costs less than its competitors: a cheap introductory offer and $99 per year after that. That’s $40 less than Amazon Prime. But all Target offers for now are fast shipping, while Amazon and Walmart have streaming and groceries.

“The biggest challenge is just trying to differentiate itself from the other big players,” Smith said.

The point is, Target can’t afford not to try. Katrijn Gielens, a marketing professor at the University of North Carolina, said it’s becoming increasingly difficult to get customers past the storefronts and actually paying for the items in their carts. She said subscriptions remove the credit card, home address and information barriers.

“So that’s something that people are afraid of, so you really lose a lot of customers,” she said.

According to Gielens, customers are generally loyal to subscriptions. They want to get value for their money.

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