A new partnership for Sam’s Club has it selling cars.
It was announced last week (via Reuters) that the warehouse division of Walmart has entered into an agreement with the online auto-shopping company TrueCar, through which Sam’s Club — which had previously allowed third parties to market cars through its site — will make a foray all its own into the auto-sales business.
The Reuters story notes that Sam’s Club was likely motivated to make the move in part by the success that rival Costco has found in the auto-sales space, having sold close to 400,000 vehicles last year.
The new partnership with TrueCar will give Sam’s Club members access to more than 10,000 of the former’s dealers and guaranteed savings off the manufacturer’s suggested retail price for new cars, in addition to offering deals on pre-owned vehicles.
Seong Ohm, senior vice president of merchandise business service for Sam’s Club — which, like Costco, makes the bulk of its profit through membership fees — told Reuters that increasing membership is the central focus of the TrueCar partnership, not profiting directly from auto sales.
“We are not extracting value other than membership,” he said. “We think this is going to be a really great program, but we also recognize it is going to take some time to scale up.”
Ohm added that the new service offered by Sam’s Club will allow its members that are shopping for a particular vehicle to see what others paid for it “so they know if they are getting a deal or not.”
Edward Jones Analyst Brian Yarbrough told Reuters that the Sam’s Club/TrueCar partnership would likely do well, but it wouldn’t be a cure-all for Sam’s to catch up with Costco in overall sales.
“It may help them close the gap on the car-buying side versus Costco, but as far as the issues with the rest of the store,” he commented, “those have yet to be fixed.”