Alibaba targets China’s middle class by introducing ‘88 Membership’ to boost consumption

China’s e-commerce giant, Alibaba, launched its customer loyalty program on Monday as an attempt to encourage consumption for its returning Chinese middle-class customers. It also offers them upgraded services and experiences such as luxury travel by partnering with Marriott.

To date, there are tens of millions of Super 88 Members and the number is expected to grow in the future, said Alibaba. Also, China has seen a record number of 500 million trips already taken in 2017, offering Alibaba another way to engage its consumers more. “We aim to offer our customers seamless, integrated, personalized and convenient user experience,” Daniel Zhang said on Monday in a press conference in Shanghai.

Alibaba’s attempts are reminiscent of its American counterpart Amazon, which is well-known for its Prime membership offerings.

Amazon Prime

Photo from Amazon.com

Amazon Prime is a paid subscription service offered by Amazon.com that gives users access to free two-hour, one-day, or two-day delivery, streaming of video and music content and other benefits for a monthly or yearly fee. With an annual charge of USD 99, Prime users can enjoy fast, free and unlimited delivery services. Users are incentivised to return and make additional purchases to achieve a return on their investment. Additionally, Amazon offers users access to unlimited streaming of tens of thousands of movies and TV episodes, unlimited photo storage on the Amazon Cloud Drive and one free pre-released book a month with Kindle First.

For Amazon, its Prime membership integrates its online services to meet the rising demands of the American middle class. Prime services was launched in 2005 and the number of users paying for Amazon’s services is still increasing. According to the data on Amazon, there were 80 million users by April, 2011. As of April 2017, Prime had more than 80 million paid users, maintaining an upwards trend.  Users who paid a subscription can enjoy Amazon’s fast delivery services and Amazon gets users to purchase more.

Alibaba’s 88 Membership

Daniel Zhang at the 88 Membership press release. Photo from Alibaba

Unlike Amazon Prime’s subscription model, Alibaba offers users ‘88 Membership’ based on a user’s membership credits, which are, in turn, earned by purchasing and spending more on Taobao and Tmall. Alibaba divides its users into three types of members: 88 Members, Super 88 Members and Selected 88 Members. Users enjoy members-only brand services, discounts and other benefits. For users, spending more leads to a higher membership level, and a higher membership level, in turn, means larger discounts and increased benefits. Additionally, Alibaba is cooperating with Marriott to offer users extra Marriott Rewards.

Alibaba and Marriott are both eyeing the rise of the Chinese middle class, which is looking for higher quality products and better services such as luxury travel, as a tremendous business opportunity. To date, there are tens of millions of Super 88 Members and the number is expected to grow in the future, said Alibaba. 

Prime vs. 88 Membership: Different models for different consumer habits  

The subscription model is not a good fit for the Chinese market as Chinese users are more likely to prefer free additional services dependent on previously-made purchases. Alibaba has, thus, set up a system to appeal to the needs and habits of its consumer base. By doing this, Alibaba aims to support a growing generation of customers who are aiming to achieve a higher life style.

(Top photo from 58pic.com)

Kaikai Shi
Kaikai Shi

Kaikai Shi majored in Biotechnology at Zhejiang University. He now runs the Tech Financing column for AllTechAsia. His interests are in new technology and reading. Kai believes that new technology will change the world we live in, and is trying to engage himself in this process. Write to him: kai[at]alltechasia.com

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