Overview of Membership-Based Retailers
Morgan Stanley’s recent analysis sheds light on the competitive landscape among top membership-based retailers: Walmart+, Amazon Prime, and Costco (NASDAQ).
Walmart+ Gains Traction
Walmart+ has shown significant growth, with a membership base nearing record levels. Strategic promotions, such as the 50% discount on Black Friday memberships, have fueled this expansion.
Membership Figures and Market Share
As of September 2024, Walmart+ reported approximately 23.8 million members, adjusted to 15.5 million to account for response variability, representing an 18.5% household penetration. In contrast, Amazon Prime’s massive reach includes 94 million U.S. households, while Costco maintains 55 million members across the U.S. and Canada
Growth Rate Comparisons
Walmart+ leads in growth with a compound annual growth rate (CAGR) of 30% between 2020 and 2024. By comparison, Amazon Prime and Costco recorded CAGRs of 3.5% and 7%, respectively.
Membership Overlap Insights
Significant overlap exists between Amazon Prime and Walmart+, with 86% of Walmart+ members also subscribed to Amazon Prime. Additionally, 34% of Walmart+ members hold Costco memberships. About 22% of Amazon Prime members also subscribe to Walmart+
Amazon’s Dominance
Analysts led by Simeon Gutman note that the overlap highlights Amazon’s extensive reach and the fierce competition Walmart+ faces in Amazon’s primary market. This overlap underscores Amazon Prime’s position as a key player in membership services.
Strategic Promotions by Walmart
Walmart’s strategic half-price membership offers are seen as a method to increase its market share beyond grocery items, targeting discretionary spending. This approach aligns with Walmart’s investments in supply chain infrastructure, Walmart Fulfillment Services (WFS), and its expanding marketplace .
Potential for Growth
Despite current figures, there is untapped growth potential. About 25% of U.S. households with both Amazon Prime and Costco memberships have yet to subscribe to Walmart+./h
Consumer Spending Trends
Morgan Stanley’s note suggests that as households adopt multiple subscriptions, retailers must innovate to capture more discretionary income. Walmart’s push into competitive pricing and targeted promotions positions it to appeal to middle-to-upper income consumers looking for value in non-grocery categories.