Target reportedly considers launching an Amazon Prime-like paid membership program

The report: Target could launch a paid membership program along the lines of Amazon Prime and Walmart+ as early as this year, per Bloomberg.

• The program may be built off of Shipt, the $99-per-year delivery service the company bought in 2017.

The challenge: Nearly 86% of US adults already pay for at least one retail membership service, including 71.1% who pay for Amazon Prime and 19.7% who pay for Walmart+, per the Insider Intelligence Ecommerce Survey conducted in December.

• A significant share also pays for membership clubs, including 28.1% who belong to Sam’s Club, and 24.9% who belong to Costco.
• Only 2.3% pay for Shipt, which offers free grocery deliveries on orders of at least $35, as well as free delivery from Target, Petco, Walgreens, and other national chains.

Given that Target would be a late entrant to the paid membership space, it would need a clear differentiator to drive shoppers to enroll. Walmart, for example, has driven consumers to enroll in Walmart+ by adding perks such as discounts on gas.

The big takeaway: It’s easy to see why Target is eying a paid membership: Programs like Prime offer a recurring revenue stream and drive more repeat business as enrolled members tend to spend more with those retailers to ensure they’re reaping the value of their investment.

• But getting shoppers to enroll won’t be easy. Target may need to undercut its competitors by making its program less expensive than its peers. It could also partner with a company such as a streaming service to offer better value and discounts.