Business Model Canvas——Take Sam's Club as an example
Although "store closures" have become one of the key words for Wal-Mart in recent years, it is Sam's Club that continuously opens new stores instead. In the bustling realm of retail, Sam's Club has etched its name as a paragon of success. As of June 3, 2024, Sam's Club, which has nearly 50 stores, has entered 24 cities in China. What are the advantages and weaknesses of Sam's Club?
Sam's Club astutely targets two primary customer segments. Middle- and high-income families, with their penchant for quality and a luxurious lifestyle, are drawn to the club for its top-notch offerings. They don't balk at paying a membership fee for the privilege of accessing superior products and services. Then, there are corporate purchasers, who rely on Sam's for the procurement of employee benefits and office supplies. Their need for bulk and consistent supplies is met with aplomb.
The club's unwavering commitment to quality is evident in its stringent supplier selection process. Fresh produce that bursts with freshness and a cornucopia of imported items tantalize customers. The Member's Mark private label stands as a testament to quality control and affordability, offering unique value. The spacious interiors and well-organized displays create a haven for shoppers. It's not just about buying; it's an experience. Complemented by services like free parking and home delivery for large items, Sam's Club elevates the shopping journey. The sprawling physical stores are more than just retail spaces; they are destinations where customers can touch, feel, and sample products. It's a place for sensory exploration and building trust in the quality on offer. The online platforms via the app and e-commerce sites extend the reach. Sam's online services include express delivery and next-day delivery. Express delivery is free for orders over 99 yuan, which well addresses the demand of small families without cars and captures the new generation of young families.
What's more, the membership system acts as a bond, rewarding loyalty with exclusive deals, events, and privileges. It fosters a sense of belonging among customers, making them return time and again. A dedicated customer service team is always on standby to address queries and resolve complaints promptly, enhancing the overall customer satisfaction quotient.
Membership Fees serves as a consistent revenue stream and acts as a filter for the club's clientele. It also funds various member-centric initiatives. With its large-scale purchasing power, Sam's Club negotiates favorable terms, achieving healthy profit margins on the sale of high-quality goods.
The supply chain network spans the globe, sourcing the finest products. This gives Sam's Club a competitive edge in variety and quality.Efficient delivery systems ensure that products reach their destinations promptly, whether it's a store shelf or a customer's doorstep.These professionals possess the acumen to anticipate trends and source products that resonate with customer demands.
However, there are still some issues that Sam's club needs to figure out.
Not only the relatively high membership fee may deter some potential consumers. For those who do not understand the value of Sam's Club, paying a membership fee is risky as they are unsure whether they can get sufficient returns from Sam's Club's products and services. But also now many people who own a Sam's Club membership card use this right to bring strangers into Sam's Club and charge an entrance fee. For Sam's Club, this behavior damages the brand image. It makes other members who abide by the rules feel unfair and reduces their trust and satisfaction with Sam's Club.
Although Sam's Club can strengthen entrance inspections. For example, at the store entrance, strictly check the identity of members, or require members to show their membership cards and valid identification documents to ensure that the cardholder and the user are the same. This phenomenon still cannot be completely eradicated. Perhaps the standardization of Sam's Club membership system is the most urgent problem to be solved after its expansion.
This post mentions Sam's Club and its unique membership system. I think this is an excellent case to explain how the membership system effectively helps companies improve their service quality. At the same time, I also believe that another aspect of the business canvas in Sam's Club helps them provide more competitive services - the lower and more cost-effective prices achieved through low profit margins, large quantities, and relatively fewer types of goods. For supermarkets (especially those that are more daily-oriented), price is undoubtedly the most sensitive factor. Although I cannot assert with certainty that there is a clear and significant correlation between Sam's Club's membership system and its means of maintaining lower prices through low-profit, large-quantity purchases, I do think that this unique purchasing method does provide a crucial prerequisite for its membership system: no one would pay to buy a membership to shop in an expensive supermarket.
ReplyDeleteOn the other hand, I also agree with the description in this post that compares the shopping process in Sam's Club to an "experience". Similar to IKEA, Sam's Club emphasizes the use and decoration of space. By presenting industrial-style packaging in a warehouse-like manner to users, Sam's Club presents some visually striking visual spectacles to users. Although this is not a decisive aspect, through the dissemination on social media such as Xiaohongshu that has an influence among Gen Z, many memes and topics closely related to the visual scenery of Sam's Club have undoubtedly strengthened the entire set of popular value narrative constructed around Sam's Club and, in turn, attracted more - as the post said, "young people" - users to become members of Sam's Club.