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Retailers take on Amazon Prime with new subscription services

Kristin Schwab Mar 7, 2024
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The average American has12 subscriptions, says Raghu Iyengar of The Wharton School. That doesn't leave much room for Target's and Walmart's. Spencer Platt/Getty Images

Retailers take on Amazon Prime with new subscription services

Kristin Schwab Mar 7, 2024
Heard on:
The average American has12 subscriptions, says Raghu Iyengar of The Wharton School. That doesn't leave much room for Target's and Walmart's. Spencer Platt/Getty Images
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Walmart and Target are stepping up their game to compete with Amazon Prime. Walmart Plus announced a new on-demand delivery program that’ll start Sunday. And Target is launching its own version of Amazon Prime called Target Circle 360 in April. But is there room for another subscription?

Raghu Iyengar is feeling oversubscribed.

“Netflix, Amazon Prime, Disney +. And then we have Sling as well to watch cricket. And then we have all the razor and the grocery delivery and all of that. So I think across all of that, I would easily say 10-plus,” he said.

Ten-plus subscriptions isn’t all that crazy. Iyengar, who’s a professor of marketing at the University of Pennsylvania’s Wharton School, said the average American has 12. But that doesn’t leave a lot of room for another subscription, like Target Circle 360. 

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

Narrow, but not nonexistent. Diana Smith, an 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 might be room for Target to draw from its loyal customer base. But Smith said Target will be playing catch-up. 

“I do think that Target is coming in a little bit 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, then $99 a year after that. That’s $40 less than Amazon Prime. But all Target offers for now is 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 thing is, Target can’t afford to not try. Katrijn Gielens, a marketing professor at the University of North Carolina, said it’s getting harder to move customers past window shopping and actually pay for the stuff in their carts. She said subscriptions remove the chore of filling out credit card, home address and other information.

“So that is something that people tend to dread, so you really do lose a lot of shoppers,” she said.

Gielens said customers tend to be loyal to subscriptions. They want to get their money’s worth.

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