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Millions More Vets to Be Able to Shop at Exchanges Online

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Military Update

Millions More Vets to Be Able to Shop at Exchanges Online
exchange-edwards-afb.jpgEdwards AFB Exchange. (U.S. Air Force Photo)
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Posted By: Tom Philpott January 12, 2017

Philpott_FB_Mug_50x62.jpgMilitary Update: After two years of study and debate, the Department of Defense has made a policy change, effective next November, to allow 16 million honorably discharged veterans to shop online for discounted military exchange products.

Peter K. Levine, acting undersecretary of defense for personnel and readiness, signed a memorandum Wednesday announcing the benefit expansion, effective Veterans’ Day Nov. 11, and giving Congress the required 30 days’ notice before actions begin to implement the plan.

Months of preparation are needed to make e-shopping portals more robust and to allow the Defense Manpower Data Center (DMDC) time to create software for verifying veterans’ status using Department of Veterans Affairs records.

Several million vets already are eligible to shop in exchanges — on base or online — because they are active or reserve component retirees, or 100-percent disabled from service-connected injuries or ailments, or Medal of Honor recipients.
Thomas C. Shull, chief executive officer of the Army and Air Force Exchange Service, led a three-year quest to expand online exchange shopping to all honorably-discharged veterans with access to computers. It cited two reasons.

One was to reward their service with exchange product savings that, on average, will be near to 20 percent versus commercial department store prices when military exemption from state and local sales tax are considered too.

Shull’s other purpose was to increase exchange revenues to help offset troubling declines due to the drawdown of active duty forces, base closures and the end of military tobacco discounts for the higher priority of healthier populations.
The Navy, Marine Corps and Coast Guard exchange services joined Shull and AAFES in pushing for the shopping benefit expansion. They worked with Levine’s office and with resale board executives in refining the proposal.

The online benefit does not extend to veterans’ dependents, although spouses and family members theoretically could use the authorized customer’s log-in credentials, given the nature of an online shopping benefit.

Exchange officials project that expanding online shopping will result in $1.8 million in added annual fixed costs to handle the larger customer base. However, they also project added sales and revenue, which will more than offset any added operating or order-fulfillment costs. Higher net earnings are seen boosting exchange dividends to support on-base morale, welfare and recreational activities.

With DMDC verifying shopper identifies electronically, the department will not have to produce special identification cards. DMDC estimates that 13 percent of eligible veterans, primarily those who served before 1981 might not be in their data base when the shopping benefit becomes available. Presumably guidance will be issued for veterans who might have access problems initially.

Defense officials believe they have mitigated concerns previously raised on expanding the exchange benefit. These included worries it would dilute the benefit for currently authorized patrons, increase appropriated funding costs, reduce state and local tax revenues for civilian communities and harm commercial retailers.

An audit of public comments to earlier news articles on the plan showed 90 percent support for veterans online shopping. Also, the online benefit should have no impact need for taxpayer support of certain exchange operations. Total sales are expected to climb annually by from $185 million to $525 million. But that range is viewed as insignificant against $300 billion in online sales reported across the retail industry, thus muting complaints retailers.

The four exchange services are to maintain independent websites and separate online portals to the selection of goods they offer. But for verifying eligibility to shop, online shoppers might have a “common landing page.”

The business case for expanding the online benefit calls it “a low-risk, low-cost opportunity” to better fund morale, welfare and recreation programs and quality of life activities. It also notes that smaller percentages of recently discharged veterans are serving until retirement to qualify for base shopping, yet a higher proportion of them probably had multiple tours deployed, often to war.

The Veterans Online Shopping Benefit will help to recognize the contributions of all who served, the business case argues, while strengthening the online benefit to better serve current patrons. The veterans are expected to at least double exchanges’ online presence, which will help attract better terms from vendors, more competitive merchandise assortments and improved efficiencies.

Exchanges project $18 million to $72 million in new annual earnings when the online operation is fully matured. Half of the added earnings typically would be distributed as higher dividends to MWR programs, which have come under budget pressure as the services divert funds to more immediate readiness needs.

The Veterans Canteen Service, which sells products to veterans under authority of VA, is weighing the idea of establishing its own online retail presence. AAFES had reached out to the canteen service about a joint venture online, but the VCS opted to “go it alone,” according to AAFES documents. That is not seen as impacting the future success of the Veterans Online Shopping Benefit.

The four exchange services reached agreement last year on how to divide revenue from the online purchases, in part by using zip codes of buyers to estimate their service affiliations. They have been eyeing a “soft launch” of the expanded online benefit to segments of vets by mid-2017 to gauge demand and test system capabilities including the process to verify veteran status before the full launch.

The more highly prized commissary benefit isn’t being opened to all veterans. Current exchange patrons won’t see more store traffic and discounts for exchange shopping on base are expected to remain higher than savings online. These factors helped to persuade major military associations to back the initiative.

Proponents were anxious to see the initiative approved before the Obama administration ends Jan. 20 to avoid having to reargue its merits to new leaders.

Military exchanges acknowledge that they are losing sales to popular online sites such as Amazon, particularly as military patrons grow increasingly comfortable with using smart phones and tablets to shop.

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cvgtpc1

More like they wanted to pass it now to get credit... would think Trump would approve this in a heartbeat.

 

Sent from my XT1635-01 using Tapatalk

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cebubird

Was thinking about a post on Commissary and Exchanges in US, as I would like to know if any of you in the US avail of the Commissary privileges, and if so, was it much of a saving compared to local grocery stores.

Just wondering if a couple hour roundtrip is worthwhile.

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Headshot

Was thinking about a post on Commissary and Exchanges in US, as I would like to know if any of you in the US avail of the Commissary privileges, and if so, was it much of a saving compared to local grocery stores.

Just wondering if a couple hour roundtrip is worthwhile.

 

The main savings for using commissaries is in not having to pay the governor (state sales tax). If their is no state sales tax, then the savings would be negligible. In states where there is a high sales tax, then the savings can be significant. The profit margins on food items are so small, that there isn't a lot to be saved (although commissaries are usually a little cheaper overall). For item-to-item comparisons, sometimes the commissary is cheaper and sometimes a civilian store is cheaper.

Edited by Headshot
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Salty Dog

The exchange system and the commissary are different and governed by different regulations.

 

My experience has been that the online exchanges can't hold a candle to other online or brick and mortar stores.

 

Commissaries are a different story and usually offer significant savings. However, I don't think they are included in this proposed change.

 

They seem to be limiting this to online exchange orders only...

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cvgtpc1

Savings negated when you tip the bagger and person that takes your groceries to the car... at least that's how it was 25 years ago. lol

 

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Soupeod

 

 

Commissary

 

Commissary yes, coffee, steak, sugar... the staples.. the rest are the same at Walmart

 

BX.  If it is in stock, maybe because of no tax.

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RogerDat

We used the commissary when we were in the states, but not the BX as they carried high priced clothing and brands of electronics, and kitchen ware. The BX could not compete with Walmart for convenience and price.

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smokey

Was thinking about a post on Commissary and Exchanges in US, as I would like to know if any of you in the US avail of the Commissary privileges, and if so, was it much of a saving compared to local grocery stores.

Just wondering if a couple hour roundtrip is worthwhile.

I used the exchange at LUKE in Arizona and it was cheaper for computers .. special deals on phones and often large companies would get overstock to bases cheap example lots of cereal when they had a sale could be picked up for 1 dollar a box in Walmart it was 2,68 a box same ... lots of specials even got a discount on a rental car and they had a burger king on base and often it had a value meal for 1 dollar

We used the commissary when we were in the states, but not the BX as they carried high priced clothing and brands of electronics, and kitchen ware. The BX could not compete with Walmart for convenience and price.

 

when we moved to Arizona they had a get a credit card from the base and get a one day 20% discount .. I bought  a whole house hold of stuff from furniture to washer and drier etc with discount better then Costco or Walmart

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RogerDat

Ha! They did not have computers at Langley, nor furniture, washers and such. It sucks being on a command base. We were lucky if they stocked uniforms so we did not have to go to the Army Base for our BDU's.

it took 5 years to get off that dump, did it by retiring.

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