Best Buy is upping its membership offerings. But retail and marketing experts are questioning if consumers will see the value in paying for the perks the electronics giant is providing.
The Minneapolis-based company
BBY,
+0.15%
announced Thursday an array of membership options, dubbed My Best Buy Memberships. The key added offering is My Best Buy Plus, which costs $49.99 annually and includes free two-day shipping, exclusive member-only prices on items, exclusive access to sales and “highly anticipated products” and an extended return/exchange policy.
There are two other plans: My Best Buy, an existing free membership program that offers basic benefits, and My Best Buy Total, which runs $179.99 annually and builds on My Best Buy Plus’s benefits by adding 24/7 tech support via the Geek Squad and two years of product protection, including AppleCare+, among other perks. My Best Buy Total replaces a previous paid program called Best Buy Totaltech that was launched in 2021.
In a statement, Patrick McGinnis, a senior vice president of memberships at Best Buy, said the company has learned from its existing membership programs that “different customers value very different benefits when it comes to their technology.” In turn, that inspired the current changes.
“Creating these new membership options allows us to be there for all of our customers in the ways that are most important to them,” McGinnis said.
Read more: Best Buy tackles sale slump with new membership plan
More retailers appear to be jumping on the bandwagon when it comes to launching paid memberships that provide free shipping and other benefits. It’s an idea that Amazon
AMZN,
-1.71%
pioneered with its Amazon Prime program that was introduced in 2005 and now runs $139 per year. For example, Walmart
WMT,
-0.03%
unveiled its Walmart+ program, which now runs $12.95 a month, a few years ago.
The programs make sense for retailers on two levels, said Thomas Donohoe, author of “The CEO’s Digital Marketing Playbook.” First, they obviously bring in money from the membership fee itself — and Donohoe notes the cost of running these programs can be relatively little in relation to the charge.
“The margins on these things are insane,” Donohoe said.
But just as important, Donohoe adds, is the fact membership programs prompt customers to return to a retailer again and again — something that’s invaluable in today’s competitive shopping landscape.
“Any time you can nudge a consumer a few feet closer to your doorstep, that’s a good thing,” Donohoe said.
The problem with Best Buy’s key new My Best Buy Plus offering, Donohoe says, is that it doesn’t offer much for its roughly $50 price, especially given that consumers aren’t likely to shop at an electronics store all that often in a given year.
That’s a view seconded by Neil Saunders, a managing director of GlobalData Retail, a research company.
“Very few people are going into Best Buy week in, week out,” he said, adding that the $50 charge is “a lot if you don’t get the use for it.”
A Best Buy spokesperson told MarketWatch that customers find value in free shipping, membership-only pricing and other benefits. The spokesperson also said the company has the option to add or change membership benefits over time to meet customer needs.
Also read: As consumers pull back on discretionary spending, what’s next for retail?
Read the full article here