The Customer Membership Experience: Amazon Prime Versus Costco Wholesale Club

Spring 2017
By Gregory Rich, Douglas Ewing, Steven Koppitsch, & Rachel McGuire | Bowling Green State University & Kantar Retail
03-07-2017

This inquiry provides an in-depth analysis of the relative performance of Amazon Prime and Costco in order to illuminate how proper management of retail membership and subscription programs can enhance the customer experience. The analysis relies on data from Kantar Retail’s ShopperScape research program, a survey-based methodology for measuring the influence of the customer experience, shopper demographics, and life stage/situation on shopper perceptions and behavior. Results show that, relative to Amazon Prime, Costco has a lower membership fee, sells merchandise at significantly lower prices, and its customers have a higher expressed loyalty – yet its membership is lagging. Sales and membership numbers of Prime, on the other hand, have steadily increased due to a variety of factors – including more efficient shipping, a better assortment of products, an increasing number of ancillary services (such as video streaming, photo storage), and the general convenience of online shopping. Further, there are interesting demographic differences across the two membership bases. For example, Prime members tend to be younger consumers undergoing transition (e.g., moving to a new home, starting a new job). Consumers who are members of both Prime and Costco have significantly higher incomes and education, compared to those who are members of either one or neither club. This inquiry provides a number of relevant insights for all consumer-oriented businesses looking to better measure and manage the customer experience.

Gregory A. Rich (garich@bgsu.edu) is an associate professor of marketing at Bowling Green State University. With research interests in retailing, sales management and leadership, he has published in Journal of the Academy of Marketing Science, Journal of Personal Selling and Sales Management, Personnel Psychology and more. He has a Ph.D. in Marketing from Indiana University.

Douglas R. Ewing (dewing@bgsu.edu) is an assistant professor of marketing at Bowling Green State University. His research interests include branding and consumer behavior, especially questions in these areas that implicate development of an identity. His publications can be found in Psychology & Marketing and Journal of Consumer Behaviour. He has a Ph.D. in Marketing from the University of Cincinnati.

Steven E. Koppitsch (skoppit@bgsu.edu) is an assistant professor of marketing at Bowling Green State University. His research explores service recovery, sales, and consumer behavior. His work can be found in the Journal of Personal Selling and Sales Management. He has a Ph.D. in Marketing from the University of Southern California.

Rachel McGuire (rachel.mcguire@kantarretail.com) is the director for Kantar Retail’s shopper insights research, which involves analysis of data from Kantar’s ShopperScape survey and other sources. She has earned postgraduate degrees from The Ohio State University in international relations, research methods, and survey research.

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