Wayfair Launches Membership Program: Are Consumers Interested?
In the latest Fast Five Short, sponsored by the A&M Consumer and Retail Group, Avalara, Mirakl, Ownit AI, and Ocampo Capital, Chris Walton and Anne Mezzenga discuss how Wayfair has introduced a new paid loyalty program, costing $29 per year, which offers members 5% back in rewards on purchases, early access to sales, and free shipping on all orders. The discussion explores the value of this subscription model in the context of growing consumer subscription fatigue and the reality that many customers may not frequently exceed the free shipping threshold of $35. Anne expresses skepticism about the program's effectiveness, arguing that most items purchased from Wayfair are likely to be above that threshold anyway, making the subscription less appealing. Meanwhile, Chris defends the program, suggesting it targets customers who would benefit from the loyalty incentives. The conversation also touches on broader themes of consumer behavior and the competitive landscape of e-commerce, including comparisons to other services like Walmart+.
Wayfair has introduced a new paid loyalty program that aims to enhance customer retention across its various brands, including Wayfair, All Modern, Birch Lane, Joss and Main, and Paragould. Priced at $29 per year, the program offers rewards that never expire as long as the subscription remains active, alongside perks like 5% back on purchases, early access to sales, and free shipping on orders of any size. The hosts dive into the implications of this program, with the conversation revealing contrasting opinions on its potential value to consumers. While Anne expresses skepticism, arguing that many shoppers may not benefit from the rewards enough to justify the cost, Chris believes the program is a strategic move that could resonate with customers who frequently shop at Wayfair but might not reach the free shipping threshold. As they explore the psychology behind loyalty programs, they touch on broader themes of consumer behavior, subscription fatigue, and the competitive landscape of e-commerce. The discussion reflects a nuanced understanding of retail dynamics, particularly how brands like Wayfair are adapting to changing consumer preferences in an increasingly subscription-driven market.
Takeaways:
- Wayfair's new paid loyalty program costs $29 per year and offers a 5% rewards back on purchases.
- The program includes free shipping on all orders and early access to major sales events.
- Some consumers may find value in the loyalty program if they often miss the free shipping threshold.
- Wayfair's management aims to address subscription fatigue by offering a lower-cost alternative to competitors like Amazon.
- The podcast hosts discuss the practicality of the program, considering shopping habits and purchasing frequency.
- Overall, the episode highlights differing perspectives on the value of the new subscription service.
Companies mentioned in this episode:
- Wayfair
- All Modern
- Birch Lane
- Joss and Main
- Walmart
- Amazon
- Target
- Paramount
For the full episode head here: https://youtu.be/xJqW3cfOfRM
This podcast uses the following third-party services for analysis:
Podcorn - https://podcorn.com/privacy
Transcript
Wayfair has launched a new paid loyalty program.
Speaker A:According to Retail Dive, Wayfair has launched a new membership loyalty program across all of its banners, including Wayfair, All Modern, Birch Lane, Joss and Main and Paragould.
Speaker A:I think, I think, I think Wayfair ascribes too much value to all those brands, but I don't know.
Speaker A:That's just my opinion.
Speaker A:The program costs $29 per year.
Speaker A:They put them in every press release.
Speaker A:The program costs $29 per year with rewards that never expire as long as subscriptions do not lapse.
Speaker A:According to a company press Release, members get 5% back in rewards on all purchases, early access to major sales events and free shipping on orders of any size, among other perks.
Speaker A:Ann?
Speaker B:Yes.
Speaker A:Are you buying?
Speaker A:I have no idea which way you're going to go on this.
Speaker A:Are you buying or selling Wayfair's new paid subscription program?
Speaker A:Because as you mentioned at the outset, you are in the middle of a home move.
Speaker B:Yes, I'm selling.
Speaker B:I'm not interested in.
Speaker A:You're selling.
Speaker B:I.
Speaker B:Well, let me clarify.
Speaker B:Okay.
Speaker A:Okay.
Speaker B:As we've said, with just about three.
Speaker A:Weeks, you're not signing up.
Speaker A:You're not signing up.
Speaker B:I'm definitely not signing up.
Speaker A:Okay.
Speaker B:As we've said though, with just about every subscription program like this, it costs you absolutely nothing but time and probably not that much time to try something like this.
Speaker B:So if you want to put it out there and see who's willing to pay you for it and just get the data about how they're using it, like, go for it, be my guest.
Speaker A:But great point.
Speaker A:With subscription programs, great point.
Speaker B:Yeah.
Speaker B:But you get free shipping right now on Wayfair for anything you order over $35.
Speaker B:And my guess is that the majority of people who are ordering things from Wayfair are at least spending $35.
Speaker B:So that $30 a year is really of no value.
Speaker B:And I, you know, I looked in specifically, I went to Wayfair, I do have the tab open.
Speaker A:Sure you did.
Speaker B:But I went in there and I checked like price low to high even.
Speaker B:They're like under $20 section, which wouldn't qualify for the, you know, free shipping.
Speaker B:And it's just basic stuff like mugs, shower organizers, Reed Diffuse, like, you know, that kind of stuff.
Speaker B:And I think that if I'm shopping for that stuff, like I can get that faster and cheaper using Amazon, going to Walmart or going to Target to get all that stuff because it's really basic, non descript stuff.
Speaker B:But pretty much everything else that you're ordering from Wayfair is going to be above that $35 threshold.
Speaker B:And I just, I don't see the 5% cash back is like something that you're going to use all that often because Wayfair to me is so much more of like a one or once or twice a year time, purchase time.
Speaker B:It's not like something consistent that I'm going to time and time again like Walmart or like Amazon.
Speaker B:But you, you probably, I don't know, you love this, I think.
Speaker B:Right.
Speaker B:This is your.
Speaker B:You're in.
Speaker B:I kind of do explain why I'm wrong.
Speaker B:Because I don't.
Speaker B:Okay, all right.
Speaker B:Why?
Speaker A:I don't know.
Speaker A:I don't know that you're wrong.
Speaker A:I think it's just perspective.
Speaker A:I think, I think the audience they're trying to hit is exactly the audience that they're trying to hit.
Speaker A:I mean, I, I mean, what do.
Speaker B:You mean by that?
Speaker A:Well, so, okay, if I step back, I think, I think this announcement or this headline in particular, it shows just how left brained Wayfair's management is.
Speaker A:Which, and this type of idea works in instances where you're talking about things related to E commerce.
Speaker A:Like this is a great E commerce idea.
Speaker A:So first off, and Right.
Speaker A:Wayfair knows that everyone has subscription fatigue so there's no way they're going to get someone to pay like 99 like people are for Walmart plus or something comparable for Amazon Prime.
Speaker A:So they have smartly just computed the inflection point of where the customer sees value and hopefully they're going to get the incremental revenue.
Speaker A:So there's some portion of their customers that are probably not hitting the free shipping threshold and the value is relatively equivalent to them signing up for this.
Speaker A:And therefore they're going to sign up for it because it just makes sense economically.
Speaker A:And therefore they're going to get more loyalty too in the long run because you get the 5% discount.
Speaker A:And then people generally are.
Speaker A:The general concept around a loyalty program is you pay for it, you're going to shop there more often.
Speaker A:That's just kind of tried and true.
Speaker A:A tried and true axiom.
Speaker A:But so you know, net net.
Speaker A:I think it's a very smart, analytical left brain move from a retail company run by the most left brain CEO in the industry, Nerd Shaw.
Speaker A:And you know, I throw a lot of shit at them but you know, when it comes to E commerce, they just get it and they understand how the economics of it work and how to drive incremental Profit from thinking in this manner.
Speaker B:Am I just in the, in like the outsider group?
Speaker B:Like how much are, how often are you buying home decor?
Speaker B:Stuff like that just seems so crazy to me.
Speaker A:It's all incremental.
Speaker A:Well, you're the one.
Speaker A:I mean I remember back when I made the, I made the argument on this show if we played back the tape where I said like home furnishings is generally speaking about big purchases, moments in your life, like having a new kid, moving a second home, retiring, going to college, it's generally about that.
Speaker A:But there are the top up purchases.
Speaker A:You know, that's what Target has made its bread, bread and butter on.
Speaker A:There's like the throw pillows, the decorative things that you add.
Speaker B:Those throw pillows are all over 35.
Speaker B:Like you're not gonna get out of Wayfair.
Speaker B:Like that's what doesn't make sense to me.
Speaker B:Like I guess you have consumers.
Speaker B:I just would want to see the data of like how many people are paying for.
Speaker A:Well, the other point of this, if you're saving 5% on your purchases, the 29 gets to be a pretty, pretty economically advantageous thing to sign up for because 5% is.29 is not 5% of all that much too.
Speaker A:I think that's another point of this which I think we probably didn't give.
Speaker A:It's just due here now that I'm thinking about it as well.
Speaker A:It's more than the 29 year.
Speaker B:I guess I just.
Speaker A:Or the free, you know, getting past the shipping cost.
Speaker A:All right, let's close up.
Speaker A:It's not, you're, you're not, you're just not into it.
Speaker A:Yeah, you're not into it.
Speaker A:But, but Wafer's happy to know that you're, you're shopping at their site with all their wares.
Speaker B:But I am not buying your subscription program.
Speaker B:All right, speaking of, speaking of this.
Speaker A:So Ann, before we move on, random aside, we're going to talk about this next week, but Walmart+ half off right now.
Speaker A:I'm official Walmart+ members.
Speaker A:I'm going to do all my shopping from Walmart this holiday.
Speaker B:I, I like, we like watched Paramount plus last night, Chris.
Speaker B:We were like in it and I was started.
Speaker B:I already placed a grocery order.
Speaker B:It was amazing.
Speaker B:I'm like super into it.
Speaker B:So yes, Walmart plus, big deal, big.
Speaker A:Time and fun tip too.
Speaker A:All of those brands you're probably shopping on Wayfair are also available on Walmart most likely.
Speaker A:So I.
Speaker B:Would you have told me to use Google lens to look at the furniture that I'm interested in and then see where I can find it for the best price.
Speaker B:Just little shout out to Google Lens again.
