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Bloomberg: How Bad Will It Get for American Express? (Costco divorce)

Bloomberg: How Bad Will It Get for American Express? (Costco divorce)

Old Oct 15, 15, 6:20 am
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Bloomberg: How Bad Will It Get for American Express? (Costco divorce)

Bloomberg has an interesting piece on AmEx today, with this same title. Some of the information in the article, particularly about co-branded cards, is particularly surprising,

How Bad Will It Get for American Express?


http://www.bloomberg.com/features/20...x-lost-costco/
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Old Oct 15, 15, 8:35 am
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accidentally clicked on the article from my BB terminal, very interesting story.

especially the following:

"In 2012, Amex launched BlueBird, a prepaid charge card with Wal-Mart that it promoted as a low-cost alternative to debit and checking accounts. In investor calls this year, Chenault has said those products are growing fast, but Amex has yet to release revenue figures for them, which suggests they’re underwhelming. “I would estimate that they make up 2 percent of the company’s card spending,” says David Robertson, publisher of the Nilson Report. “They aren’t moving the needle yet.”"
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Old Oct 15, 15, 11:53 am
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It's a story that really shows us a sign of the times.

The need to physically take out a card to buy something is going away so the color of the card becomes totally irrelevant.

When AA dropped Amex I upgraded my Citi Visa to get AA club access. I don't need to show my card to enter as it's tied into my FF account.

It's all about the benefits and co-branding.

When Amex benefits diminish cardholders will bail to the next card that provides what they need.

Amex must reinvent itself, as the article clearly points out Amex is run by an "old boys" network.

They need some young, hungry blood at the top.
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Old Oct 15, 15, 2:19 pm
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Bloomberg: Why American Express and Costco Got Divorced

Bloomberg's Elizabeth Dexheimer reports on the American Express and Costco relationship ending in a "divorce." She speaks on "Bloomberg ‹GO›." (Source: Bloomberg)

http://www.bloomberg.com/news/videos...o-got-divorced
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Old Oct 15, 15, 3:02 pm
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for those who prefer to read:

http://www.bloomberg.com/features/20...x-lost-costco/
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Old Oct 15, 15, 4:12 pm
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Something not in the Bloomberg article that is significant in the video. The female news anchor at the news desk at the end of the video.

<<You should have called my dad Frank .... He is a big Costco customer. He always uses his Amex. If you go there he will buy you ANYTHING!>>

I actually have seen this happen many many times. People buying things for family they would not ordinarily purchase. So is the secret buying sauce Amex demographic customer or Costco demographic customer?
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Old Oct 16, 15, 12:25 am
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As a Costco customer first (and Amex plat customer second) what I really don't get is how Amex disincentivises me from using their cards. I'm happy to pay the annual fee for the lounge + boingo + concierge product; a mediocre rewards program keeps my spending with a premium Chase card. After the change I'll still keep both cards in my wallet, but look forward to earning more valuable points.
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Old Oct 16, 15, 6:52 am
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Great article!
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Old Oct 16, 15, 9:00 pm
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Originally Posted by worldwidedreamer View Post
As a Costco customer first (and Amex plat customer second) what I really don't get is how Amex disincentivises me from using their cards. I'm happy to pay the annual fee for the lounge + boingo + concierge product; a mediocre rewards program keeps my spending with a premium Chase card. After the change I'll still keep both cards in my wallet, but look forward to earning more valuable points.
Have you considered dumping the AmEx and getting a Citi Prestige card instead? That's my plan as soon as the annual fee for the AmEx comes up. I get better lounge access (me + guest or immediate family), better annual airline rebate ($250 vs $200), and still have concierge access, all for a $350 annual fee instead of $450 (I applied in-branch). I'll lose the Boingo access but honestly I think I used it once all year.

Between losing Costco and the strong competition from other high-end cards, Amex will lose me on two cards by mid-2016.

Neil
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Old Oct 16, 15, 9:14 pm
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Ouch.

Amex was another vendor, just like the one that sold Costco ketchup. “If I can get cheaper ketchup somewhere else, I will,”
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Old Oct 16, 15, 10:27 pm
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Originally Posted by missamo80 View Post
Have you considered dumping the AmEx and getting a Citi Prestige card instead? That's my plan as soon as the annual fee for the AmEx comes up. I get better lounge access (me + guest or immediate family), better annual airline rebate ($250 vs $200), and still have concierge access, all for a $350 annual fee instead of $450 (I applied in-branch). I'll lose the Boingo access but honestly I think I used it once all year.

Between losing Costco and the strong competition from other high-end cards, Amex will lose me on two cards by mid-2016.

Neil
Lost a 100 dollar phone. was told to fill out a bunch of forms and file/fax in police report only to be denied the claim. lost a 500 watch, one called to amex and was reimbursed within a week. reason enough for me to keep my amex.
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Old Oct 17, 15, 1:36 am
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Originally Posted by Aventine View Post
Ouch.
You might be able to take a guess about how he thinks of his customers if this is how he treats his business partner (at least in public).
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Old Oct 17, 15, 1:40 am
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I love the vanity of the pre-scripted Ken Chenault visits.
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Old Oct 17, 15, 2:08 am
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Originally Posted by uclacolumbiaunc View Post
You might be able to take a guess about how he thinks of his customers if this is how he treats his business partner (at least in public).
Yeah really. So much for the benevolent Costco.

Originally Posted by LondonElite View Post
I love the vanity of the pre-scripted Ken Chenault visits.
Someone needs to put this scene on SNL or a movie.
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Old Oct 17, 15, 6:39 am
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Originally Posted by Aventine View Post
Yeah really. So much for the benevolent Costco.
Honestly, I'm not entirely sure that the masses of folks shopping for ginormous, family size boxes of breakfast cereal and toothpaste at Costco spend a whole lot of time pondering, nor do they even care if Costco is "benevolent." I'm not necessarily talking about you specifically, but rather the bell curve of people walking through Costco's doors everyday.

In fact, I suspect the quoted "ketchup" comment is exactly in alignment with most of Costco's customer base; if they can get something cheaper somewhere else, they will.

And actually, I find it hilarious that anyone in this forum would have a problem with Costco's mentality on this front. This forum (even this thread) is absolutely clogged with people whom everyday threaten to drop Amex cards because they can get the same benefits with another card for $50 cheaper or they want to cancel the card, get a refund for the annual fee and then want to figure out how long they can continue to use the benefits of the card and on and on. This is the world we now live in, everyone believes they are entitled to BMW quality at a Sam's Club price...

Regards

Last edited by scubadu; Oct 17, 15 at 6:45 am
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