In China’s e-commerce battle, memberships are the new loyalty currency

As the end of the year approaches, it’s time to plan next year’s spending.

For Yaoyao, renewing memberships on major e-commerce platforms is a significant expense. As a working mother in her 30s, she has become more selective about membership products and their benefits. “Nowadays, every platform has memberships. It’s neither realistic nor necessary to subscribe to them all. Only those that provide tangible value, address pain points, and offer savings, efficiency, and convenience are worth paying for,” she said.

In 2024, a notable e-commerce trend is the shift from competing on price to competing on service.

In the earlier stages of the mobile internet era, e-commerce platforms focused on acquiring new users. Now, with consumption stratification and diminishing traffic dividends, retaining users has become a top priority.

Paid memberships are undoubtedly an effective strategy to gather a platform’s most valuable users. Driven by the sunk cost effect, paid users tend to remain on the platform, leading to significantly higher repeat purchase rates and average transaction values, which in turn drive long-term, stable profitability. Against the backdrop of platforms increasingly enhancing membership benefits, what makes a membership truly valuable to consumers? And what role do memberships play for the platforms themselves?

What makes a good membership?

As an experienced online shopper, Yaoyao has developed her own method for evaluating e-commerce memberships amidst the overwhelming options.

She believes that good membership services must reflect the platform’s sincerity in delivering real value and enhancing recognition of the membership benefits. Such benefits should have practical utility, improving the user’s experience and quality of life. “A good membership isn’t just about being good on paper. It’s about aligning with my consumption philosophy and meeting my needs,” she said.

With numerous responsibilities at home and work, Yaoyao values efficiency in shopping. “Nowadays, promotional rules are becoming more complicated. Comparing prices, meeting thresholds for discounts, and waiting for preorders take too much time. During Singles’ Day this year, I wanted to buy a down jacket for my child. After finding a product I liked, I realized my order size was slightly short to qualify for the discount. Adding items to my cart to meet the threshold ended up completely deviating from my original intention to buy just the jacket.”

As someone bearing more household responsibilities, Yaoyao embodies the principle of prioritizing quality over quantity. She is highly sensitive to prices but also seeks quality and reputable brands. Additionally, as a young mother, she considers fit and appearance crucial when buying clothes.

After much deliberation, Yaoyao ultimately purchased the jacket from Vipshop. “Vipshop offers substantial discounts, guarantees brand quality, and eliminates the hassle of meeting minimum spend thresholds. With its membership benefits like unlimited free shipping and door-to-door returns and exchanges, I don’t have to worry about fit or appearance issues. It’s like having a virtual fitting room at home,” she said.

In addition to Vipshop’s SVIP, Yaoyao renewed her JD.com Plus and Taobao 88VIP memberships. When asked why, she said: “Just like the comfort Vipshop provides for clothing, I rely on JD.com for large appliances and the convenience of same-day or next-day delivery. As for Taobao’s 88VIP, it also fulfills my needs for watching dramas and listening to music. With it, I essentially have memberships for Mango TV, NetEase Cloud Music, and Quark all in one—it’s undeniably a worthwhile expense.”

Why do platforms need paid memberships?

As a concept introduced from abroad, paid memberships have been pivotal for global companies like Sam’s Club, Amazon, and Costco, which generate partial profits directly from membership fees. For example, according to public data, Sam’s Club had 8.6 million members in China as of November 2024. Assuming a basic annual membership fee of RMB 260 (USD 36.4) per person, Sam’s Club’s membership revenue in China alone exceeds RMB 2.2 billion (USD 308 million).

However, unlike these international leaders, no Chinese e-commerce platform has achieved profitability through membership fees alone. So, what exactly is the value of memberships for them?

The answer to this will require revisiting the development history of China’s e-commerce market.

Since 2010 ushered in the mobile internet era, China’s e-commerce market has experienced significant growth. Established platforms like Taobao and JD.com expanded rapidly, seeing increases in both user numbers and market scale. The emergence of Pinduoduo in 2015 disrupted the competitive landscape for the following decade. In 2020, content-based platforms like Douyin escalated the competition to new heights.

Today, the focus of competition among e-commerce platforms has shifted from low-cost user acquisition to in-depth, service-based user engagement. The main reason is that increasingly fierce competition has made market traffic scarcer.

With the total user base nearing saturation, the space for new user growth is shrinking, and customer acquisition costs are steadily rising. At the same time, the growing homogenization of goods and services across platforms has given consumers more choices and made their consumption habits more rational. Instead of sticking to a single platform and pursuing low prices blindly, consumers now prioritize comprehensive services and how value-for-money products really are.

In this new era of intense competition for existing users, retaining high-value users has become a key focus for platforms. To maximize user retention and loyalty, platforms are shifting their strategies from price wars to enhancing user experiences, often through upgrading services. Among these efforts, improving membership benefits has become particularly crucial.

In October 2015, JD.com introduced its Plus membership, becoming the pioneer of paid membership systems among Chinese e-commerce platforms. Over the next decade, similar memberships emerged, such as NetEase’s Lifease, Kaola’s Black Card, Suning’s Super, Alibaba’s 88VIP, and Vipshop’s SVIP. These have jointly led to the rapid evolution of localized paid membership models.

Take JD.com’s Plus membership as an example. In addition to basic perks like shopping discounts, exclusive pricing, coupons, and free shipping, JD.com introduced lifestyle privileges for Plus members in 2018. These cover dining, entertainment, and leisure benefits, connecting online and offline consumption. In recent years, JD.com has further enhanced its membership offerings, introducing perks tailored to various categories, such as home improvement, pets, medications, and health checkups, as well as features like joint memberships, unlimited free shipping, and online returns and exchanges, to meet increasingly refined consumer needs.

Super users as the backbone of platforms

Ultimately, the essence of paid memberships is identifying a platform’s “super users.”

In the long run, every industry follows the Pareto principle: a small number of core users with high spending power and engagement contribute a disproportionately large share of consumption. These super users form the foundation of an e-commerce platform’s revenue.

For instance, Alibaba’s 88VIP currently boasts 46 million members—a relatively small subset of the platform’s total active user base. Yet, during this year’s Singles’ Day presale, 88VIP members made 60% more purchases than last year. Their average spending also increased by over 30%, and their visits rose by 50%. Over half of the sales of Tmall’s top brands came from 88VIP members.

Vipshop’s SVIP is another relevant example. By offering extensive benefits like an additional 5% discount on sale items, exclusive limited-time offers, unlimited free shipping on self-operated goods, offline discounts, voucher packages, and private online and offline sales, Vipshop has cultivated a highly loyal group of super users. In Q3 this year, the number of active SVIP users grew by 11% year-on-year to approximately 7.5 million, contributing 49% of Vipshop’s online sales.

By segmenting consumers and targeting paid members with tailored services and benefits, platforms can significantly enhance user loyalty and engagement. This creates a stable foundation for consistent GMV growth and recurring revenue while fostering a mutually beneficial relationship between platforms and super users. Furthermore, this cycle naturally attracts high-quality merchants to join, contributing to a sustainable e-commerce ecosystem.

In today’s competitive environment, this strategy strengthens a platform’s resilience and defines its long-term performance ceiling.

For example, ordinary users who join JD.com’s Plus membership see their annual spending and purchase frequency increase by more than 150% and 120%, respectively, within a year. Similarly, according to a 2024 report by CBN Research Institute on paid e-commerce memberships, 88VIP members were found to be the most loyal in the industry, with an 83% renewal rate. Alibaba’s official data shows that, during this year’s Singles’ Day, the scale of Tmall brands partnering with 88VIP grew by over 300%, driving new growth for brand sales.

As the mobile internet enters its later stages, the significance of membership-based economies is becoming increasingly evident. The quest to acquire, nurture, and retain members may hold the key to sustainable growth in this fiercely competitive landscape.

KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by 36Kr Caijing.

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