Morgan Stanley breaks down stacking between Walmart, Amazon, Costco membership By Investing.com
Investing.com — In a recent note to clients, Morgan Stanley analysts weighed in on the competitive landscape among the leading membership-based retailers, focusing on Walmart+, Amazon Prime, and Costco (NASDAQ: ).
According to the report, Walmart+ continues to grow with a membership base approaching record levels, bolstered by strategic initiatives such as its 50% off Black Friday membership.
Citing its Consumer Pulse survey, Morgan Stanley notes that Walmart+ saw an estimated 23.8 million members as of September 2024. Adjusting for response variability, this figure is closer to 15.5 million, representing an 18.5% household penetration.
While this falls short of Amazon.com Inc’s (NASDAQ: ) Prime’s 94 million US households and Costco’s estimated 55 million members across the US and Canada, Walmart+ is outpacing peers in growth, with a combined growth rate of annual growth rate (CAGR) of approximately 30. % from 2020 to 2024.
In comparison, Amazon Prime and Costco showed respective CAGRs of approximately 3.5% and 7% during the same period.
Membership overlap is still significant, with Amazon Prime and Walmart+ showing the highest overlap. About 86% of Walmart+ members also subscribe to Amazon Prime, while 34% hold a Costco membership.
Among Amazon Prime members, 22% also have a Walmart+ membership.
“The high accumulation of Amazon Prime members among the group of Walmart+ members is mainly due to Amazon’s large membership, but it also shows that Walmart+ continues to be very competitive in Amazon’s core market,” explained analysts led by Simeon Gutman.
They also point out that Walmart’s promotional strategies, such as offering half-price memberships, are poised to improve its market share beyond the grocery base for discretionary spending.
The retailer’s efforts are consistent with its significant investment in supply chain infrastructure, Walmart (NYSE: ) Fulfillment Services (WFS), and its growing marketplace.
“Offering a discounted membership at a key shopping time of the year should not only drive sales but help maximize the fixed cost of this investment and all new innovations.
sellers,” said the report.
In addition, the note highlights untapped potential growth, noting that nearly 25% of US households have Amazon Prime and Costco memberships but have yet to use Walmart+.
Morgan Stanley also considers the broader implications of consumer spending habits. As families sign up for more services, marketers are finding new ways to differentiate themselves and capture revenue from sight.
Walmart’s push to expand its membership base through competitive pricing and strategic promotions could position it as a strong contender in the non-grocery segment, appealing to middle- to upper-income shoppers looking for value.
