Taobao 88VIP major upgrade, will it compete head-on with JD.com PLUS members?

As paying members, who is better this year?

Every year, Double 11 is a big test for Alibaba and JD.com in the second half of the year, and also a battlefield for them to compete with each other. This year, both parties are aiming at the same direction - paid membership.

Following JD.com’s upgrade of the PLUS membership system in August, Taobao also upgraded its 88VIP system on October 10.

The original benefits and prices of 88VIP remain unchanged, and it is renamed "Life Card". New "Shopping Card" and "All-purpose Card" are added, focusing on the "new three packages" benefits of e-commerce shopping, including daily red envelopes, return shipping packages, and after-sales guarantee packages.

Before the Double 11 in 2023, this series of "big moves" made by 88VIP is undoubtedly an important signal.

1. What are the upgrades of 88VIP?

Since the launch of 88VIP, Taobao has upgraded and iterated to a certain extent every year, but this upgrade is the biggest one in recent years.

Currently, you can see the new upgrade introduction when you open the Taobao membership interface, which has upgraded from one card to three cards. The specific benefits are as follows:

• Life Card: the original membership, 88 yuan/year, with the feature of three co-branded membership annual cards (choose 1 of Mango/Youku membership, NetEase Cloud Music membership, and Ele.me membership).

• Shopping card: This newly added category is also 88 yuan/year, and its features are the new three guarantees for e-commerce shopping, including return shipping package (free return, door-to-door pickup, 10 times/month, up to 25 yuan shipping fee for each time), after-sales guarantee package (exclusive customer service to follow up on product disputes, follow up and handle within 24 hours and give the results), and 2 yuan red envelope every day, but there are no three major co-branded membership cards. Let’s focus on the 2 yuan red envelope, which can be used to deduct 2 yuan every day (valid for 24 hours) when shopping, which means that if you shop on Taobao 44 days a year, you can get your money’s worth. Of course, Taobao also has a lot of small things that cost one or two yuan, and buying these products is equivalent to buying for free.

• All-purpose card: also newly added this time, priced at 168 yuan/year. As the name suggests, it combines the features of a living card and a shopping card. This means that by paying an additional 80 yuan, you can get a Taobao red envelope of 2 yuan per day and the right to return shipping.

All three cards include other benefits, such as 5% off, big sale coupons, Quark membership, AutoNavi membership, Fliggy saving card, Marriott Platinum Challenge, Hilton One Stay Upgrade, etc.

At present, old customers have one chance to choose, and the default card is changed to a living card, which can be upgraded to a shopping card for free. If you want to upgrade to an all-purpose card, you need to pay extra, the specific amount is: 80 yuan/365 days of X88vip remaining days.

It can be seen that this time Taobao divides the card into three parts in order to meet the needs of different users and in different scenarios.

The Life Card maintains joint rights with products such as Mango TV, Youku, NetEase Cloud, and Ele.me, meeting users' various needs for eating, watching, listening, and playing.

Shopping cards focus on shopping scenarios, and are detailed to ordering, returns, and after-sales, providing more secure services for users with high shopping frequency.

The all-in-one card includes the first two to meet the needs of highly active users in different scenarios.

Obviously, further refined operations can bring better user experience and attract more consumers to join. It also proves Taobao's determination to do a good job in member operations, because they know that these high-value members are the cornerstone of Taobao's stable development in the future.

JD.com also understands this and has fully upgraded its JD.com PLUS membership as early as August. So which one is better?

2. 88VIP vs. JD PLUS, which one is better?

Compare the benefits of paid members of the two platforms, see the figure below

We can find that the focus of JD PLUS benefits is “saving”.

Whether it's "unlimited free shipping" and "shopping rebates", or the membership day on the 8th of each month, the promotional prices of various categories are even lower than during the big sales, and the main purpose is to save money.

Because JD.com has the advantage of self-built logistics, and most of the goods are operated by JD.com itself, which means it can independently control gross profit and profit margins.

The biggest advantage of 88VIP is that it has a powerful ecosystem with rights and interests covering food, clothing, housing and transportation . The membership fee alone is worth it for the membership of several other platforms.

Through diversified rights and interests content, we can reach users in different fields and attract more users to join. Data shows that for every 100 new 88VIP users, 38 new Youku users, 32 Ele.me users and 27 Tao Piao Piao users can be added.

Each of these rights has its own advantages and disadvantages, such as:

In terms of life, 88VIP has Gaode Taxi and Ele.me, etc., with a wider coverage. JD PLUS members have coupons from Meituan and Didi, but the discounts are lower. In terms of health, JD Home Delivery is faster in buying medicines and has more consultation and physical examination services, but Ali Health sometimes has a more complete range of medicines and has the privilege of a 95% discount.

In summary, the two products are comparable in terms of cost-effectiveness. JD PLUS is more suitable for people who focus on shopping experience, while Taobao 88VIP focuses more on the diversity of benefits.

In fact, the rights and interests of the two platforms are highly complementary, and there are many people who are members of both platforms. The key lies in which rights and interests you value more.

3. Why become a paid member even if it means losing money?

In fact, whether it is Taobao 88VIP membership or JD PLUS membership, they are both real "loss-making" projects.

Take 88VIP as an example. Without considering the discount benefits of products, and only looking at the bound joint membership benefits, the total price has exceeded 600 yuan, which is very cost-effective for users.

In addition to the joint benefits, from 2018 to 2020, Alibaba also spent money to hold three consecutive 88 Member Festivals, inviting many celebrities to perform, which also cost a lot of money.

JD.com's membership benefits are just as strong as Tmall's. For example, regarding the previous benefit of 10 times the amount of Jingdong beans, according to JD.com App data, each PLUS member can receive Jingdong beans worth 220 yuan per year. Based on the number of 30 million members, JD.com will lose about 6 billion yuan in profits each year for this item alone.

If calculated based on the annual fees of 88 yuan and 99 yuan respectively, Taobao 88VIP and JD PLUS bring in 2.2 billion yuan and 2.87 billion yuan in membership fee income for the platforms respectively each year. This figure is obviously not comparable to the amount invested by the platforms.

Jia Luo, vice president of Alibaba and general manager of Tmall platform operations division, once said: 88VIP is a project that cannot make a profit. It has been losing a lot of money since its launch.

Han Rui, vice president of JD Group, admitted frankly: Judging from the income and expenditure of JD PLUS members, they are "far from making enough to cover their expenses."

Why would e-commerce platforms rather not make money but insist on having paid members?

For e-commerce platforms, building a membership system by "losing money to gain publicity" does not value the membership fees, but the spending power of these members.

First of all, since the membership system itself has a certain threshold, this helps the platform screen out high-net-worth users.

Taking 88VIP as an example, generally speaking, if users want to reach the threshold of 1,000 Taobao points, these users themselves have the characteristics of high consumption, high repurchase and high purchasing power.

Data shows that the average annual spending of JD PLUS members is 10 times that of non-PLUS members. After ordinary users become PLUS members, their spending amount and frequency increase by more than 150% and 120% year-on-year respectively within one year.

Secondly, rich membership benefits can attract more users, and the membership ecosystem can also link up various businesses under it.

For example, 88VIP and JD PLUS members, their rights and interests are not limited to the e-commerce field, but also extend to various areas of life, including food, entertainment, daily necessities, housing, travel, health and finance, covering all aspects of user life.

Therefore, the construction of a paid membership system seems to be a loss-making business, but from a long-term perspective, attracting high-value users may become a new path in the era of stock.

Author: Yan Tao WeChat public account: Yan Tao Sanshou