(Yicai) Dec. 21 -- Alibaba Group Holding’s supermarket chain Freshippo, also known as Hema Fresh, has suspended new membership subscriptions.

Freshippo halted new member subscriptions on Dec. 13, an insider at the Shanghai-based firm told Yicai. To renew their membership, customers with a valid membership can regularly do it on the app, while those with expired membership need to visit Freshippo X physical stores, the insider noted.

Freshippo introduced a paid membership system in 2019. The annual fee was CNY218 (USD31) back then, but the price was raised to CNY258 last year. As of Dec. 31, Freshippo had three million paid subscribers, bringing in an annual revenue of CNY588 million (USD82.3 million). Members can enjoy a 12 percent discount on some product categories on selected days.

Despite the middle class is expected to account for 35 percent of the Chinese population by 2030, consumption willingness among the middle class notably narrowed, according to a report by Boston Consulting Group, a US market researcher hired by Freshippo.

Given the results of the report, as well as the fierce competition in the industry, Freshippo decided to shift its focus to price competitiveness at offline stores.

In October, Freshippo launched a reform, lowering sales prices of over 5,000 products at its physical stores, trying to differentiate its sales channels, as 70 percent of its revenue comes from online stores.

In the future, there will still be consumer groups purchasing memberships to satisfy different needs if Freshippo demonstrates that it can provide upgraded services and experiences.

Editors: Zhang Yushuo, Futura Costaglione