The wholesale club competition has escalated to a new level. Costco recently broke its long lasting exclusive partnership with American Express, and members are not happy. Sam’s Club took advantage of the disastrous credit card swap, opening it’s doors to Costco members for a limited time. With this clear attempt to lure over customers, we wanted to know how many consumers have their hands in multiple wholesale shopping savings pots. Despite America’s love for saving, we found there was absolutely no overlap between club members. Unsurprisingly though, our analysis of online purchases revealed that Costco dominates the wholesale shopping market, accounting for nearly 70 percent of the activity. Read on for our full wholesale shopping analysis.
Wholesaler club loyalty
There is a lot of debate regarding the best wholesale clubs, which tend to focus on consumer benefits and comparative costs. We took a different approach, focusing on consumer activity on the leading three wholesale club websites: Costco, Sam’s Club and BJ’s. We analyzed six months of shopping activity to assess customer loyalty, and found that there was absolutely no overlap between wholesale clubs, as club members purchased exclusively from their club throughout the first half of 2016.
Wholesaler loyalty is an anomaly in the e-commerce industry, as retailers usually see strong overlap with their competition. Customers don’t want to spend money on multiple memberships in the wholesaler space, meaning that it is even more vital for wholesalers to steal share away. Wholesaler members’ loyalty could also be one of the reasons for Jet.com’s business model change from membership based to pay-as-you-go. If you can’t get wholesale members to switch to you, your membership program doesn’t have a chance.
Leading wholesale club by purchase volumes: Costco
We analyzed inbound traffic, purchase volumes and every step of the conversion funnel, to identify the leading U.S. wholesaler. We found that Costco dominates the wholesale market, attracting 56 percent of the customers and accounting for 66 percent of online purchases. Sam’s Club took second place for traffic and conversion volumes, but had a higher cart abandonment rate than BJ’s. However, BJ’s site had lower add-to-cart rates than Sam’s Club, as only 8 percent of the consumers that viewed a product initiated the checkout process. Costco and Sam’s Club had similar checkout initiation rates, but Costco’s site is better geared toward pushing consumers down the conversion funnel, as it has the highest checkout initiation and completion rates with the lowest product view rates.
Leading wholesale club by conversion rates: Costco
Our data indicates that Costco also won the conversion rate game, with rates that nearly doubled BJ’s, and were 1.5 times that of Sam’s Club. Furthermore, comparing each site’s conversion rate to the average revealed that Costco alone exceeds the average rate. Sam’s Club is the runner up for conversion rates, and BJ’s takes last place.
Bottom line: Every company and industry is unique. While retailers report strong customer overlap with their competitors, the wholesale sector seems to foster customer loyalty. It is imperative for business leaders to understand the bits and bytes of their industry’s ecosystem and competitive landscape to make informed strategic decisions and dominate the market. We’ll continue to investigate trends in consumer shopping behavior, so stay tuned!