In the ongoing retail war of brick versus click, subscription ordering is now a key part of the strategy to grow e-commerce sales.
Few consumers enjoy shopping for basic household items such as laundry detergent, toothpaste and vitamins, but everyone has to do it, and do it regularly. Retailers of all kinds are hoping to seize the opportunity to make shopping for consumables more convenient—and win the consumer over and over and over again as a result.
Online retail behemoth Amazon launched its "Subscribe and Save" program in 2007, but traditional brick-and-mortar retailers are only recently jumping in to offer competing programs. There are also start-ups such as BirchBox and Dollar Shave Club that are making the subscription space even more competitive.
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Sam's Club, a business unit of Wal-Mart, began a pilot program for subscription service in February. Wal-Mart tested, but ended, a snack subscription program called Goodies.
Target recently expanded its pilot subscription service, from just 200 eligible items to about 1,500. The big box discount retailer also added a 5 percent discount and free shipping for all subscription orders. If shoppers pay with a Target REDcard, they can layer on the additional 5 percent savings.
Target initially launched the service in September 2013, with a focus on baby-care items. The retailer said the subscription service now accounts for more than 15 percent of online sales for eligible items.
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Target does not provide total online sales numbers, but is expected to report its latest earnings on Wednesday. In its fourth-quarter conference call, Target said its online sales grew more than 20 percent, year over year, while total sales fell 3.8 percent. In the first quarter, analysts surveyed by Thomson Financial expect the discount retailer to earn 71 cents a share on revenue of $17.01 billion.
So which subscription program is better, Amazon or Target? CNBC did a test with identical products to compare the two. (And neither company was immediately available to comment on the results.)
Ordering
A link to Target's subscription service is right on its main homepage, and was easy to find. I couldn't even find a page for Amazon's "subscribe and save" program on its site, so I went to Google and did a phrase search, which did get me to a link explaining the program. I'd give Target the win on this part.
Product choice
There are thousands fewer options available on Target's subscription model, compared with Amazon's. However, fewer choices actually made Target's site easier to navigate, but it also means there are fewer choices. If you are very particular about the goods you want, Amazon might be better for you.
Delivery schedule
Although it might be hard to know exactly when you'll need to re-order your basket of goods, you'll have to give it your best guess and pick a delivery schedule when using both services.
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Amazon's delivery interval schedule is monthly, and it ranges from a shipment every month to intervals as long as a shipment every six months. Target's delivery schedule has more interval options, including a six-week option. As a result, Target may have the advantage here because if I have learned anything about consumer behavior, it's that we all like choices.
Total cost
We looked at a basket of six items, shown in the table, and found that Amazon was less expensive for those particular items, coming in $23.34 cheaper without the REDcard savings, and $17.49 with the extra REDcard savings. (Comparisons were made before tax.)
As you'll see in the table, the size of the price gaps varied. For baby wipes, for example, the difference was pennies, but for others (i.e., toilet paper) the difference was significant.
TABLE Subscription services, Target vs. Amazon 140520
| Product category | Product | Target<br> subscription<br> price | Amazon<br> subscription<br> price |
|---|---|---|---|
| Face wipes | Yes to Cucumber Hypoallergenic Facial Towelettes, 30 count (2 pack) | $11.98 | $9.10 |
| Dishwashing liquid | Seventh Generation Natural Dishwasher Detergent packs (45 packs) | $10.29 | $8.80 |
| Toilet paper | Cottonelle Ultra Comfort Care Double Roll Toilet Paper (32 Rolls) | $33.24 | $17.66 |
| Allergy med | Claritin RediTabs 24 hours Allergy, Non-Drowsy, Loratadine Orally disintegrating Tablets, 30 tablets | $19.99 | $18.98 |
| Baby wipes | Pampers Sensitive Wipes 7x Box 448 Count | $10.99 | $10.42 |
| Men's razor refills | Gillette Fusion ProGlide Manual Men's Razor Blade refills, 8 count | $30.49 | $28.68 |
| Total (pre- tax) | $116.98 | $93.64 | |
| Total (pre-tax) with 5%<br> off for Target REDcard | $111.13 | ||
As for shipping costs, both retailers offer this free. But CNBC didn't actually place the orders, we can't comment on the delivery experience.
—By CNBC's Courtney Reagan.
Watch CNBC's "Street Signs" Wednesday to hear more from John Mulligan, Target's interim CEO.
