Alibaba’s 8.8 Members Festival and Strategic Cooperation with Marriott International Highlight a Focus on Loyalty

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KEY POINTS

  • Alibaba held its first-ever 8.8 Members Festival. The event featured exclusive discounts on products, a gala performance and VIP shopping sessions for members.
  • Alibaba has also teamed up with Marriott International to link their respective membership programs in a joint strategic cooperation that aims to deliver a more personalized online travel service for Chinese tourists.
  • This follows from the announcement in July that Alibaba had completed the integration of the membership programs of Tmall and Taobao.
  • We believe Alibaba’s focus on an integrated membership program highlights the transition of its strategy from acquiring new traffic and users, to further deepening its relationship with its current and most-loyal members.
  • Going forward, we expect Alibaba to roll out more New Retail-related initiatives and enter into more loyalty partnerships with retailers and service providers to cater to this loyal consumer group.

Our Take

Alibaba hosted its first-ever 8.8 Members Festival on August 8, 2017. The event featured exclusive discounts on products, entertainment and VIP shopping sessions for its members. The previous month, Alibaba announced that it had completed the integration of the membership programs of Tmall and Taobao to create a single comprehensive membership program across its e-commerce platforms. On August 2, Tmall unveiled a new Luxury Pavilion for Chinese consumers that provides a level of exclusivity and a similar tailored experience to shopping in a physical store (see Five Reasons Tmall’s Luxury Pavilion Is Well Positioned to Ride China’s Consumption Wave). We believe Alibaba’s focus on an integrated membership program highlights the transition of its strategy from acquiring new traffic and users, to further deepening its relationships with its loyal and high-spending members. We expect Alibaba to continue to roll out more New Retail-related initiatives to cater to this group of consumers.

For our related reports, please see:

 

Alibaba 8.8 Members Festival

Alibaba hosted its 8.8 Members Festival on August 8, 2017 to reward its most loyal shoppers on its e-commerce platforms. When pronounced in Chinese, “88” is a homonym of “BABA,” which is also Alibaba’s ticker on the New York Stock Exchange.

The 8.8 Members Festival encompassed:

  • Exclusive benefits: 8.8 Super Members received discount cards for the Tmall Supermarket and partnering brands that entitle them to discounts all year round.
  • An 8.8 Members Gala: Alibaba hosted a gala for the 8.8 Members Festival, for which admission was limited to Alibaba members. Nine celebrities performed with about 11,000 members in attendance.

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  • Intime VIP Shopping Sessions: Six Intime department stores across China were open to Alibaba and Intime members only. Consumers who wanted to enter the department store needed to scan their Taobao or Intime mobile app. Alibaba announced in January 2017 that it would privatize Intime as part of its New Retail initiative.

For our reports on Intime and Alibaba’s New Retail initiative, please see:

 

Alibaba’s 88 Membership Program

Alibaba’s 88 Membership program is part of its effort to appeal to mid- to high-end consumers by offering a range of exclusive upscale products and services on its various e-commerce platforms. Top-tier members of the program are entitled to faster access to various participating brands’ offerings, limited editions and personalized products and services.

 

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In June 2017, Alibaba announced that it had completed the integration of the membership programs of Tmall and Taobao. Under the integrated program, members are categorized into three membership tiers based on their spending history on Alibaba’s platforms (including Taobao, Tmall, Taopiaopiao, etc.) in the past 12 months. The reward points will capture each member’s average ticket size, purchase frequency, interaction and credibility. The three membership tiers are:

  1. Standard Member: A consumer with 300‒1,000 reward points is eligible to become a Standard Member.
  2. Super Member: A consumer with over 1,000 reward points is eligible to become a Super Member.
  3. APASS: A consumer with over 2,500 reward points will be invited to become an APASS member.

Members are entitled to various discounts throughout the year. During the 8.8 Members Festival, a Super Member can receive discount cards, including a Tmall Supermarket discount card, which entitles them to a 12% discount on purchases all year round, and membership cards for brands such as Godiva and Levi’s, which entitles them to a 12% discount on all
products, etc.

According to data from Alibaba, only about 3% of its platforms’ active users qualify to be Super Members.

The 88 membership program was backed by 50 top global brands, offering exclusive deals and promotions to members. One of the first was the partnership with Marriott International that was announced on August 7. The brands that Alibaba is partnering with span the food and beverage, healthcare, sportswear and cosmetics verticals and include L’Oréal, Rimowa, Godiva and New Balance.

 

Further Commercial Opportunities for the 88 Membership Program

Data can help retailers “better meet demand” and “create new demand,” according to Alibaba CEO Daniel Zhang. We highlight the following use cases and future commercial opportunities that Alibaba’s membership program can provide.

  • Help Alibaba’s e-commerce platforms and partners identify consumers with strong purchasing power.
  • Enable Alibaba to better serve Chinese consumers by partnering with brands, such as Marriott International. Alibaba’s membership program and platform is scalable and can partner with many brands.
  • Attain a more accurate customer profile: With more data collected from loyal members on its platforms, Alibaba can better understand and analyze each member’s shopping behavior and preferences in order to customize touch points throughout the shopping journey to better target content and product recommendations. For example, it was learned that those consumers born during or after the 1980s have the highest spending power and have 587 reward points on average, according to a joint report from Alibaba and media DT Caijing.

 

Integration of Marriott International and Alibaba’s Membership Programs

On August 7, 2017, Alibaba and Marriott International announced a strategic cooperation agreement that aims to deliver more personalized online travel services for Chinese tourists. Marriott International is headquartered in the US and has a portfolio of 30 hotel brands, including JW Marriott, Ritz-Carlton, St Regis and W Hotels, in about 125 countries. The joint venture will operate the Marriott’s Chinese-language digital channels, including the Marriott and Starwood Hotels websites, the Marriott mobile app and the Marriott storefront on Fliggy, Alibaba’s online travel booking platform. Certain Marriott hotels in select markets will also accept Alipay, China’s leading mobile payments platform affiliated with Alibaba.
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Privileges available to Alibaba’s members include:

  • Alibaba members can sign up for corresponding levels of Marriott International membership based on their Alibaba reward points. Those members with over 2,500 Alibaba points can directly apply to become Marriott Gold Card members, and those with over 1,000 can apply for a Marriott Silver Card.
  • Alibaba members are also invited to events organized by the Marriott, including private music concerts and sports tournaments, such as NBA China.

For our annual report on Chinese outbound tourism, see Deep Dive: Chinese Outbound Tourists—More Diverse, More Sophisticated

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We look forward to reporting more updates on further developments of Alibaba’s initiatives.