Last month Lands’ End announced it was bringing back its Canvas product line, rebranding it Canvas by Lands’ End. The goal of the revived product line was to reach a younger, more fashion conscious audience. Shortly after the announcement, Lands’ End added an Amazon Prime-like membership feature for Canvas by Lands’ End customers.
For a $50 annual fee, plus applicable taxes, Circle members get:
- Free standard shipping and free returns
- 20 percent off regular-price items
- 10 percent off sale and clearance items
- Early access to new sales
In Circle’s Terms and Conditions, Lands’ End reserves the right to modify the program periodically and to offer other membership programs. Discounts do not apply to the purchase of gift cards, gift boxes, personalization, shipping and handling, or toward the payment of taxes.
So why offer a Prime-type membership for a select group of a brand’s products? Obviously, with 40 million subscribers, Amazon Prime has been successful, and it will continue to be successful as it experiments with unbundling its video service from its main membership, offering monthly payment options and partnering with companies like Sprint.
Can Lands’ End experience the same kind of success? As a brand known for quality merchandise and stellar customer service, Lands’ End is already doing a lot of things right. Bringing Canvas back is an experiment in and of itself, bringing with it a set of risks, financial and otherwise. The Circle membership program, however, has a much lower risk. The benefits of earning customer loyalty, recurring revenue and frequent buying outweigh the risk of customers who may spend more than their $50 worth of discounts.
For example, in the initial announcement, Lands’ End priced one of its most popular pieces – a long sleeve silk tee – at $85 (regular price). A 20 percent discount is $17. Let’s say shipping on that piece would normally be $5 to $8. A customer would only need to buy two or three items at that discount level for the membership to be worthwhile. The question is can Lands’ End make enough on the memberships at $50 each.
We love that subscription and membership models have made so many experiments like this possible. Companies, even financially solid companies like Lands’ End, no longer have to have a huge cash outlay to try something new. They can package a subscription or membership like Circle, and see if it sells. In some cases, the membership fee won’t be sufficient.
Remember Jet.com? That company abandoned its $50 annual fee just three months in. It regrouped quickly and is still trying to make a go of it. Successful companies will experiment with different packages and price points, measure their results quantitatively, gather qualitative feedback and make adjustments.
Based on the numbers, Lands’ End may find that a $50 fee isn’t going to cut it, so it was smart that the company explained that it reserves the right to make changes up front. As long as customers understand this going in and Lands’ End maintains its quality and customer service standards, Lands’ End could see success and be able to expand the membership program to include its primary product line. Of course, we’ll be watching…and we just may need to sign up to see how it works for ourselves. In the name of research, of course.
~ Dana E. Neuts, Senior Staff Writer, Subscription Insider