Sam's Club to boost services, open more stores in China

Date: 22 Oct 2019

Walmart Inc's high-end membership store Sam's Club is expected to strengthen its premium membership for Chinese customers, boost one-hour home delivery and plans to have 40-45 outlets opened or under construction by 2022, a top executive of the company said.

Sam's Club has developed more than 2.6 million members in China, made up largely of individual consumers. The rest are business members.

In addition to its current 260 yuan ($38) membership fee, Sam's Club has introduced a 680 yuan membership that offers high-end family services such as dental care at private clinics and car washing coupons.

In an era where the country has seen a rising number of businesses operating on membership models, Sam's Club has been flourishing in the sector. It has been a pioneer in this category with more than two decades of operation in China.

Sam's Club has been more adept in understanding their key consumers by providing them with high-end services and products, and this has boosted their repeat buying rate and loyalty, said Chen Zhiyu, senior vice-president of e-commerce and marketing, Sam's Club China.

One year after pushing out their premium membership, nearly 85 percent of those who signed up the premium membership are upgraded from the 260-yuan membership, Chen said. These groups highly demand premium quality items, for example, whose concerns on fresh produce are food safety and nutrition, rather than price.

Compared with promotional prices, Sam's Club's consumers pay more attention to the quality of products and how to improve their quality of life, added Chen.

Last year, the retailer's revenue grew 8 percent year-on-year despite having only a small proportion of the overall market.

Sam's Club provides delivery services through its website, online application and partnership with JD. It focuses on increasing the coverage and efficiency of its one-hour delivery service, which it operates through an alliance with delivery firm Dada-JD Daojia.

The delivery service mainly covers high-frequency products such as fresh food, maternity and baby products. In Beijing, it is expected to cover members residing within the fifth ring road area.

Chen said one of Sam's Club's priorities is to focus on increasing the coverage and efficiency of its one-hour delivery service. About 30 percent of their members have used the delivery service, with higher rates seen among premium members, Chen said.

Launched in 2017, the service has been introduced in Shenzhen, Beijing and Shanghai.

The key to increasing delivery efficiency is the company's Club Depot warehouses, which are often based in the residential districts of cities in areas of about 200 to 300 square meters where rental costs are lower as a result.

The kinds of products in the club depot range between 800 and 1,000.The depot focuses on fresh food, and infant and maternity products, which consumers often require as soon as possible. By comparison, a Sam's Club would have about 4,000 kinds of products.

Chen said that within 10 kilometers of each outlet, there will be about four to five Club Depot warehouses to improve the omni-shopping experiences of their members and cultivate stronger loyalty from customers than merely providing brick-and-mortar channels.

Source: China Daily

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