Walmart is taking a direct shot at Amazon Prime with a new perk for Sam's Club members

  • Sam’s Club is rolling out free shipping to shoppers with its “Plus” membership, which costs $US100 annually.
  • The move comes one month after Sam’s Club abruptly closed 63 of its stores and said a handful would be turned into e-commerce distribution centres.
  • The first distribution center, in Memphis, Tennessee, will open within six weeks.
  • When asked why Sam’s Club abruptly closed so many stores without giving some employees advance notice, the company’s CEO, John Furner, said he wanted workers to find out about the news from Sam’s Club rather than the media.

Sam’s Club is rolling out free shipping on most of the items it sells online, from televisions to washing machines, in a direct challenge to AmazonPrime and Costco.

The offer will be available to shoppers with Sam’s Club’s “Plus” membership, which costs $US100 annually. Amazon Prime, by comparison, costs $US99 annually. But unlike Prime, Sam’s Club won’t guarantee two-day delivery – at least not yet.

On a call with reporters Tuesday, the company, which is a subsidiary of Walmart, said that it’s ramping up its e-commerce operation by opening more distribution centres this year, and that it is aiming to eventually deliver a vast majority of the items it sells online within one or two days.

Sam’s Club is rolling out the free shipping for its members one month after abruptly closing 63 of its stores, which represented about 10% of its total locations. The company said at the time that up to a dozen of the closed stores would be turned into distribution centres to fulfil online orders.

The closures, which impacted more than 9,400 employees, came as a shock to both customers and workers.

In some cases, employees were not told their store had closed before showing up to work on January 11. On that day, some Sam’s Club stores were closed permanently. Others were closed for the day, then reopened until permanently closing several weeks later.

When asked on Tuesday why Sam’s Club carried out the closures in that manner, the company’s CEO, John Furner, said he wanted to make sure employees heard the news from Sam’s Club rather than the media.

“What we prioritised was that associates heard the news of the closings from one of us,” he said.

Some of the affected workers will be able to reapply to jobs at stores that are being turned into distribution centres.

The first distribution center will open within six weeks in Memphis, Tennessee, the company said Tuesday. Sam’s Club executives plan to assess that facility’s productivity before moving forward on transforming other closed stores into distribution centres.

The company is tentatively planning to open other e-commerce facilities in Florida, California, the Chicago area, and the Northeast in the coming months, executives said.

Sam’s Club also said Tuesday that it is reducing its number of memberships from three options to two: the $US100 Plus membership and a new “Club” membership costing $US45 annually.

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