Very few companies compete as directly as Sam’s Club and Costco. Yes, there is a third warehouse club chain, BJ’s wholesale, but that brand is very much the RC cola to Sam’s Club and Costco’s Coke and Pepsi.
In many markets, the two warehouse club giants compete directly. Sometimes they’re literally across the street from each other and on other occasions, they are close enough that they’re competing for the same customers.
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Both chains offer a similar merchandise selection and low prices. One of the ways they hook people in to keep them as members is selling them something that isn’t on the store floor.
If, for example, you get your prescriptions filled at Costco’s pharmacy, not renewing your membership means having to change drugstores when your membership expires.
That one thing may not be enough to keep you, but if you end up with multiple services purchase through your warehouse club that increases your loyalty.
Costco and Sam’s Club make the vast majority of their profits selling memberships. It’s much easier to keep a member than it is to recruit a new one.
Sam’s Club does not share membership retention rates regularly. Costco routinely brags about theirs in their quarterly earnings call.
“In terms of renewal rates at Q3-end, our U.S. and Canada renewal rate was 92.7% and the worldwide rate came in at 90.2%,” Costco CFO Gary Millerchip said during the chain's third-quarter earnings call. “…The decreases in the renewal rates in Q3 versus Q2 were primarily attributable to sign-ups from a Groupon promotion in the fall of 2023, entering the renewal rate calculation for the first time this quarter.”
Walmart's Sam's Club adds pet perk
If Sam's Club or Costco (COST) can get a member to subscribe to another annual service through one of its deals, it locks that customer in. That's why both offer low prices on things like accounting software, wireless service.
Ideally, both warehouse club chains want to tie members to service that will cost a lot more if they drop their membership.
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Sam's Club has a perfect offering for that purpose with its new deal with Spot Pet Insurance.
The Walmart-owned (WMT) warehouse club has launched an integrated pharmacy program and discounted insurance plans from Spot exclusively for Sam’s Club members, designed to make care simpler, more affordable and more accessible — right inside your local club.
What Spot offers Sam's Club members:
- Up to 15% off customizable pet insurance plans (and Spot’s additional 10% multi-pet discount on all added pets) through Spot.*
- 110+ pet medications available for $80 or less, with no reimbursement forms. More than 50 of these medications are available for $15 or less. A select flea, tick and heartworm preventative medication for cats and a select heartworm preventative medication for dogs is available for no out of pocket cost.
- Convenient in-club medication dispensing service, eliminating the need for extra vet visits for medication dispensing.
“This is a program built by Spot Pet Insurance and Sam’s Club with real life in mind. It’s care designed to help work with your routine, not complicate it. And with many Sam’s Club members owning pets, many of whom aren’t likely currently insured based on national pet insurance statistics, we knew there was an opportunity to make a meaningful difference in the lives of millions of families,” wrote Sam's Club Vice President of Healthcare Sherri Keeth.
Costco offers pet insurance too
Making pet insurance more readily available is a noble goal as few Americans have it.
Of the 165.3 million pets in the United States, only 3.92% are covered by pet health insurance, according to data from the North American Pet Health Association.
That's at least partly because many people don't know how to buy it. Sam's Club and Costco adding pet health insurance should make it much more accessible for people.
Costco has a more limited offer for Figo Pet Insurance.
“Quality, affordable pet insurance can help pay for unexpected veterinarian bills. As a Costco member, you may be eligible for an exclusive discount on plans,” Costco shared on its website.
Gold Star and Business members get 15% discount. Executive members get the same discount but also get Lost Pet Recovery serviced by 24 PetWatch1.
“This includes 24/7 access to Lost Pet Recovery Specialists and DirectConnect services to help reunite lost pets with their families. The membership is valued at $59.95 for the first year and includes a complimentary renewal each year as long as you remain a Costco Executive Member,” the site shared.
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