Alibaba’s new VIP membership plan to build platform loyalty looks a lot like Amazon Prime

Alibaba Group Holding on Wednesday said it is rolling out a new paid membership package that will give members benefits across its ecosystem of services as it looks to gain market share in digital entertainment and food delivery.

Called “88 VIP”, users pay an annual fee of 888 yuan (US$128.70) to purchase a package that entitles them to a year of benefits, such as access to content on video-streaming platform Youku Tudou, a subscription to Alibaba’s music platform Xiami as well as discounts on its food delivery platform Ele.me and e-commerce sites Taobao Marketplace and Tmall. Existing Alibaba users who have 1,000 points can pay 88 yuan to upgrade to the 88 VIP package.

Alibaba’s new membership package is similar to Amazon Prime in the US, where members get free shipping, discounts and access to streaming video and music. The move comes as Alibaba seeks to gain a larger market share in platforms with Ele.me, and with its digital entertainment offerings, at a time when Chinese users are more inclined to pay for content and services thanks to rising affluence and ease of mobile payments, with apps such as Tencent Holdings’ WeChat Pay and Alibaba-affiliated Alipay.

“Customers always take centre-stage at Alibaba. With the introduction of ‘New Retail’, customers are more engaged both online and offline. The decision to have an exclusive membership tier is not just about rewarding our most active members, it’s also about building an all-around experience our customers can enjoy every day,” said Chris Tung, chief marketing officer of Alibaba.

The membership package from Alibaba, the dominant e-commerce platform in China with almost 60 per cent market share, according to statistics from eMarketer, will likely appeal to users who shop regularly on the platforms and is designed to encourage customer loyalty or “stickiness”, as users are more likely to consume digital content from Youku and Xiami if membership is included.