(Yicai Global) May 22 -- American retail warehouse chain Sam's West Inc., better known as Sam's Club, has furthered ties with China's largest retailer JD.Com Inc. by rolling out one-hour home deliveries in Shanghai as it looks to bolster market share in the country's premium fresh produce sector.
Dada-JD Daojia officially began e-commerce and delivery services in Shanghai for the Walmart Inc.-owned retailer today, starting in the central hub of People's Square with plans to cover all central districts, the company said at a press briefing in the eastern metropolis. China's largest city will be the second to enjoy express home delivery from membership-based Sam's Club after the firm launched a similar service last month in southern tech hub Shenzhen.
Demand for wholesale goods is changing among China's middle-class households. Consumers are smartening up and rejecting traditional product channels, such as local markets, and turning to online platforms to fulfill their needs and provide quality goods. Some 81 percent of affluent families singled out quality as the key factor in food purchasing decisions, according to 2017 data from digital think tank Pintu360 which marks the first time buyers gave priority to quality over price.
"The era of the quality-oriented online fresh food consumer has arrived," said Dada-JD Daojia's Chief Executive Philip Kuai. "In April this year, the proportion of high and middle-income users on Dada-JD Daojia made up nearly 40 percent of the total, an increase of 15 percent over the same period last year," he added, saying these users contribute 60 percent of gross merchandise sales volumes.
"When purchasing fresh products, users are not sensitive to promotions and pay more attention to the origin, variety, quality," he continued. "They purchase 10 fresh products during each purchasing occasion on average, of which six are high-quality raw or imported fresh products."
The partnership is already bearing fruit for Sam's Club, said Chen Zhiyu, the company's senior vice president for e-commerce, said at the press conference. Its week-to-week growth rate has averaged 35 percent over the past two months and customer spending per item is 2.4 times higher than for similar services in the sector, he added.
Like the Shenzhen service, Sam's Club products are available in Shanghai via its own app and on Dada-JD Daojia's own mobile platform. The Dada-JD e-store allows non-members to shop too, but prices are higher than those for subscribers. Sam's Club aims to leverage the e-commerce firm's 50-million-strong user base as a key means of acquiring new customers in the country.
Dada-JD Daojia provides delivery services through its crowdsourced logistics platform for over 100,000 online stores in 30 major Chinese cities, and boasts some 20 million active users a month.
Founded in 1983, Sam's Club is one of the largest members-only warehouse supermarket chains in the world, with over 800 stores and more than 50 million personal and corporate members. The firm runs 19 stores in China and has acquired almost two million members since entering the market in 1996.
Editor: James Boynton