Exclusive tech content below, only $10 to access10/7/2015
There’s something exclusive about being part of a group. Feeling part of a movement or private society is why people join churches or gyms, go to specific schools, buy specific brands and join cults. There are additional benefits to each of those examples, but at their core they are exclusive, some being more walled off than others. The savviest are the groups that withhold access benefits until dues or fees are paid. It feels dirty, but these clubs wouldn’t exist if people didn’t want what was on the other side of the pay wall.
During the course of the last five years, the online retail world has overwhelmingly embraced the barrier fee, or as they prefer to call it, “Retail Club.” I guess it feels warm and cuddly to feel you’re part of a club and not simply a cold business transaction, but these retail clubs are running rampant across the online marketplace. Amazon Prime is the biggest, NewEgg’s Premier is a popular alternative, Jet.com is the hot young thing on the market and Walmart is the brick and mortar retailer scrambling to get into the online club scene. All these online retailers lure in e-shoppers with promises of great online deals, free shipping and other free services such as Amazon’s streaming media and unlimited cloud storage.
In print, retail clubs sound as boring as watching mud revert to dirt. However, this mud is special. Amazon Prime has approximately 25 million members paying $79-$99 a year for its benefits, and this past July, that entry fee was given a bonus shopping holiday with “Amazon Prime Day.” Only Prime members were given access to a day of exclusive deals on electronics, clothing, sporting goods, and basically every tangible item you can think of.
Discounting the fact most of those discounted products were lackluster, for Amazon, Prime Day was more about building buzz for the membership as a whole. Outsiders had zero access to Prime Day, and it drove them mad. Amazon saw its largest sales day in its 20-year history and recruited millions of new members to its exclusive service for the invented shopping holiday.
The deals, streaming movies and online storage mean nothing to Amazon, Jet, Walmart, NewEgg or any of the small-time imitators. Retail clubs are all about having a guaranteed monthly pipeline of cash flowing to the business. Whether or not a consumer actually takes advantage of the retail club is irrelevant as long as he or she pays the dues; it’s how Costco and Sam’s Club have operated for years.
Even with their constant stream of fees, retailers know consumers can’t stop themselves from shopping. Paying that entry fee implants a shopper’s guilt devil or sunk cost fear in the back of the mind. The guilt being, “I’m paying for a product, I should really be using it and not just burning my entry fee.” Before you know it, that guilt is forcing you to buy in bulk and impulsively buy items you might need in the future but don’t need immediately.
This is all before examining Jet.com, the e-retailer certain to bloat your shopping cart. Members on Jet don’t even know the deals at their disposal until they add products to their shopping cart. With items in your cart, Jet shoppers get notified of related items that get special discounts when grouped with other purchases. Jet has somehow found the sweet spot between awesome shopping deals and evil retailer business practice.
Exclusivity is a dangerous drug. It’s why people subscribe to Netflix, HBO and Hulu. It’s why fools buy timeshares. It’s why you are a Costco, Prime and soon-to-be Jet member. CV
Patrick Boberg is a central Iowa creative media specialist. Follow him on Twitter @PatBoBomb.