Supermarket giant Coles has taken the wraps off its new ‘flybuys max’ higher-tier loyalty program, offering customers store-wide discounts and free home delivery in a move that experts say comes “straight out of the Amazon Prime playbook”.
Fairfax reports Coles’ flybuys max program will cost users either $10 per month or $99 per year, and provide them a flat 5% discount on all of Coles’ fresh produce, along with free home delivery and access to online video streaming services through provider MuviNow.
Alternatively, shoppers can also opt to instead claim a bonus number of flybuys points when they shop rather than the flat discount, netting 10 points to the dollar rather than one point under the existing flybuys program.
Coles’ new system is the next evolution in the ongoing loyalty programs wars between Australia’s biggest supermarkets, with some retail analysts believing the flybuys system has lagged behind Woolworths’ revamped rewards program in recent times.
Speaking to SmartCompany, retail expert and associate professor at Queensland University’s Business School Dr Gary Mortimer says Coles’ move is “very smart” and is directly out of Amazon Prime’s “playbook”.
“Coles has been chasing Woolworths for the last couple of years, and this is now potentially going to be a game changer when it comes to reward and loyalty programs in supermarkets,” Mortimer says.
“One of the biggest criticism levelled at points systems is points fatigue, where every business provides loyalty points and no one knows what to do with them. This is quite different to where Coles is going.”
Amazon Prime is the company’s membership and rewards service, which recently launched in Australia and offers shoppers free, guaranteed two-day delivery for $59 a year, along with a range of other benefits, including access to video streaming and ebooks.
In a statement provided to SmartCompany, Coles’ general manager of loyalty, insights and flybuys Alex Chruszcz said the new program was currently being tested with a small group of members, but will eventually roll out nationally.
“It’s currently being tested with a small group of members so that we have the best possible offers available when it rolls out nationally. The feedback so far has been very positive and the plan is for the offers to evolve,” he said.
“Flybuys max is one of the many exciting new offers flybuys will have for members in the future. We’re working with the best brands in Australia to make the program more rewarding for our members.”
Amazon still a threat
Mortimer believes this is Coles creating a “hierarchy” of loyalty programs, which will be a huge differentiating factor when it comes to the ongoing supermarket wars Down Under.
“Shoppers are pretty quickly going to recognise the value associated with this,” he says.
He compares the system to Qantas’ frequent flyer program, where anyone can get a basic membership but only those who fly the most get gold and platinum cards.
But despite Coles being on the front foot, Mortimer believes Woolworths won’t be far behind and the retailer will now be “running around working out how to also create more value”.
“They’ll both be investing heavily in click and collect, as the online grocery market is worth $3 million and is projected to grow 12.5% over the next decade,” he says.
“The supermarkets will be concerned Amazon will potentially move it’s Amazon Fresh grocery delivery service locally, but at this stage it’s logistically hard to do.
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