As driving web traffic becomes increasingly challenging for internet companies, most e-commerce sites introduce membership programs to retain their existing customers. They refine their membership programs in China in an effort to maximize revenues from regular shoppers, while offering them more perks in return.
Amazon China will offer more perks with its Chinese version of the prime membership program including free shipping, member-only discounts and product diversity, the firm’s vice president Gu Fan told Yicai Global on Jan. 15. It will develop it based on the company’s US user retention experience.
Amazon unveiled the Chinese version of prime membership in October 2016, and the program has since become the most important tool to drive cross-border e-commerce sales. As more e-commerce sites have rolled out membership services, Amazon China is facing increasing competition on the membership service market.
The 20/80 rule could be applied to sales contributions from Prime members and non-members, said Gu, who oversees Amazon Prime service operations in China. “There’s a substantial difference in purchase frequency between members and non-members”, he said without mentioning exactly how many more purchases members make every month relative to non-members. Furthermore, Prime member numbers have also remained a secret at Amazon China.
“Customer acquisition has become very expensive for e-commerce businesses, so everyone has introduced their own membership programs to attract new customers at a lower cost,” he noted. The companies do not want to invest resources equally among their users. Instead, they need to focus on people who can bring them more value.
However, member benefits that they offered so far are very similar. The perks typically include free shipping, member discounts and cash back deals. Effective expansion of membership benefits is the key to the success of these programs.
In addition, membership pricing has become a very sensitive matter for e-commerce sites. JD.com’s Plus membership is priced at CNY299 (USD46) a year, and NetEase charges an annual membership fee of CNY279 on Blackcard holders.
After rolling out Prime services in China in 2016, Amazon set the membership fee initially at CNY188 per year, and hiked it to CNY288 in the following year. In exchange for the markup, Prime users were provided with expedite delivery service and exclusive discounts. Gu did not give an answer to the question of whether the membership fee will increase in future.
Source: yicaiglobal.com
