BABA uses "loss" to make a friend.

"does BABA really have any money? Li Shu's question went on Weibo Corp's hot search a few days ago. The occasion on which Li complained was the "laughter and laughter on the Cloud ceremony", which was the main event in the third year of BABA's membership Day. Two years ago, the membership festival mainly invited big-name stars such as Wu Yifan and Yi Qianxi, while this year's lineup "reducing dimension" has become talk show actors such as Li Shi, Zhang Boyang and Cheng Lu.

Therefore, this made Li Xia laugh at himself that the decline in the position of curry showed BABA's predicament that he had no money.

Although this joke is not true, according to Jia Luo, vice president of BABA and general manager of Tmall's operations department, BABA's member project 88VIP is a completely "losing money" project. When asked if it was possible for the business to turn a profit in the future, Jialuo replied categorically: "it's hard, it can't be done." "

So the question is, why does BABA keep betting on a project that is destined to lose money?

Make a friend at a loss

The lossmaking 88VIP project is BABA's "No.1 Project", which is the position clearly given by Zhang Yong, the current chairman of the board and CEO, in the group's internal speech.

After Singles Day holiday in 2017, Zhang Yong personally launched and launched the paid membership system called "88VIP". It took only half a year for BABA's member team to put forward the idea to take shape on the ground. Considering the large number of rights and interests involved in the membership system, the team needs to discuss with different companies one by one, the implementation time of half a year has exceeded expectations, and this just shows BABA's strong demand for the construction of a paid membership system.

In fact, the threshold for becoming a 88VIP member is not low-users with a mischievous value of less than 1000 cost 888 yuan, while consumers with a mischievous value of more than 1000 only need 88 yuan.It is with this threshold that 88VIP filters out its "superusers". What BABA has to do is to make this batch of super users do not need to make choices, nor do they need to compare goods. 88VIP gives users what they want most.

In 2018, just started, 88VIP strives to build an all-in-one card membership system covering major scenes such as eating, drinking and merrymaking. In 2019, after the initial completion of the opening of ecological internal resources, it began to introduce non-ecological resources, including Marriott, Aikang Guobin, China Minsheng Banking Corp and so on have become brand-new partners.

This year, the membership system has been expanded to cover almost every aspect of consumers' lives in nine scenarios, such as "eating, playing, listening, watching, buying, traveling, health, finance, and getting home". In addition, international big names such as Prada, Montblanc and Sea Blue Mystery have also entered 88VIP's equity pool for the first time.

According to statistics, among the 388 annual cooperative brands this year, luxury brands account for 23%. These brands will provide discounts, 10 times points, sample gifts and other benefits to their members. The mass addition of top brands means that this membership system, which has just started for three years, is already quite attractive to brands.

As a large number of brands have expressed their desire to join, every year the rights and interests of 88VIP will be optimized and iterated according to the interests of consumers."in order to become one of the 388 brands, the rights and interests offered by enterprises need to make users feel strongly that they are worth it, otherwise there will be no need to show up here next year. The only ticket is offer for consumers."Jialuo believes that this dynamic mechanism of survival of the fittest is enough to ensure the long-term vitality of this membership system.

For example, in the online music category, even though BABA's Xiami Music is also in the interest pool of 88VIP, 88VIP still partnered with NetEase, Inc Yun Music this year. As the direct head of 88VIP business, Lu Wei said that making consumers feel "really fragrant" that "everything I want has been arranged" is the only indicator to determine the rights and interests of members. The online music platform to provide 88VIP users with the rights and interests of Xiami Music and NetEYun Music is obviously aimed at the goal of improving member satisfaction.

In fact, BABA's internal positioning of 88VIP can be summarized into two words: cornerstone and long line.This means that the company plans the long-term development of this membership system for a period of ten years.In other words, what BABA hopes to achieve is nothing more than trying to make long-term friends with consumers with "lost money" investment.

Not a functional member, but an ecological member

No matter for physical shopping malls or online e-commerce, a set of perfect membership system is an indispensable part. It is generally believed that the establishment of a membership system will help to increase the proportion of paying users and improve the life cycle value and ARPU value of users.

However, BABA's expectation of the 88VIP project is somewhat different from the traditional understanding, it does not focus too much on economic benefits, but more consideration can allow consumers to enjoy more rights and interests, which is even directly reflected in the formulation of the team KPI.

"We still have users' rights and interests in the KPI assessment of 88VIP, and we pay attention to whether users are satisfied with their rights and interests and membership," Jialuo told 36Kr Holdings.

Generally speaking, the goal of the general membership system is to bring more functional members to the channel, that is, to maximize the life cycle value of members in the platform by means of promotion, coupons and so on. Such membership business generally requires accurate calculation of ROI, so that consumers can spend as much as possible under the appearance of substantial benefits. Therefore, the membership system of most platforms is actually a profitable business.

However, the idea of building this kind of membership system is easy to fall into the bottleneck of involution: for users, membership provides them with only a single platform, a single service and a single function of limited rights and interests; for enterprises, this kind of membership system can only become a position for them to operate stock users, and will touch the growth ceiling after a certain stage of development.

In order to solve this problem, the goal of 88VIP is not to create functional members, but to get more ecological members. After the integration of resources allows users to enjoy the rights and interests of one card to open up various consumption scenarios, the active degree of members and user stickiness can naturally be significantly improved. The "registered members" and other problems often encountered by the traditional membership system can be easily solved in the expanding ecology.

On the other hand, when the activity of the members is fully stimulated through the opening of the ecology, it will attract more brands to give more attractive rights and interests, and the ultimate benefit is the members themselves.

According to statistics, every 100 new 88VIP users in BABA Ecology can bring 72 new users to ele.me, 46 new users to Feizhu and 44 new users to Youku. The eco-external partners who work with 88VIP also benefit. The unit price of 88VIP users in Aikang's state guest business is 1.2 times that of ordinary users, and Mainian Health also got 110000 new customers from this channel in four months.

The overall data may better reflect the commercial potential unleashed by the 88VIP project: among the 388 brands partnered each year, the unit price of 88VIP users is more than twice that of the average user, the purchasing power during the boom period is three to four times that of the average user, and the purchasing width is six times that of the average consumer. To some extent, it can be said that BABA is not only using his own losses to make friends with consumers, but also helping businesses involved in the project to benefit from many aspects, such as promotion, customer acquisition and income increase.

"in fact, the 88 yuan required to become a 88VIP is not a logic of cost pricing, it is just a sense of ritual to declare cooperation between the two parties," Jialuo defined.

Gather the most experienced buyers

"these people of 88VIP are not only the most senior purchase users of BABA Taobao, but I can also think they are the most senior purchase users in China," Jialuo said.

Choose "naughty value more than 1000" as the threshold to join 88VIP, because mischievous value can judge whether consumers are high-living, high-buying and high-potential in a more comprehensive, comprehensive and multi-dimensional way. Judging from the various cases surrounding the 88VIP project in the past, the consumer groups it gathered are playing a more important role than expected in China's e-commerce ecology.

For example, the recent sudden rise of the new consumer brand Yuanqi Forest, in its early development, many seed users are 88VIP members.With the help of the word of mouth of these members, Yuanqi Forest's brand concept of "0 sugar, 0 fat, 0 card" and "sugar-free health" is quickly accepted by more consumers, thus becoming the representative brand of the new power of beverage. During this year's 618 promotion, as much as 40 per cent of Yuanqi Forest's turnover came from 88VIP members.

In the "Innovation Diffusion Theory" put forward by the American scholar Rogers, the diffusion of innovative things among the public often begins with a relatively small group of innovators and early adopters. 88VIP members obviously belong to these groups, they not only have higher consumer demand and open and inclusive attitude to innovative things, but also affect the consumption behavior of other groups.

Many brands take a fancy to this point and regard 88VIP as the preferred platform for releasing trendy goods. Huawei, for example, uses 88VIP as the only channel to sell folding-screen phones, selling 200 phones every Tuesday, Thursday and Saturday, which consumers cannot buy through offline channels or other e-commerce platforms.

Jialuo mentioned that 88VIP has undergone many significant changes in its three years of development: "We have changed from a platform for helping brands to achieve transactions, to a platform for helping brands to achieve fan operation and fan marketing. "the continuous accumulation of large-scale high-quality users in the membership system has become a sharp weapon for the team to continue to find new breakthroughs.

The "quality" here may not only refer to users' spending power, but also their personality, attitude and lifestyle.For example, members of the 88VIP project have generated more than 100 million high-quality comments across the network, and these highly active consumers have even brought a distinctive style to some platforms.

When 88VIP and NetEyun Music announced a partnership, a phenomenon known as "cross mental pollution" began to occur on both platforms at the same time. On Taobao, some loyal users of NetEase, Inc Yun Music deliberately gave comments on products in the comment style of "net suppressing Clouds", while in NetEase, Inc Yun Music, users who entered through the 88VIP channel brushed up "absurd" remarks such as "does listening to this song affect me to drive a Lamborghini?" and changed the atmosphere of the whole comment area on their own.

With the scope of partners from within to outside the ecology and the diversity of rights and interests coverage scenarios, such chemical effects are becoming more and more high-frequency and unexpected.

This probably explains why BABA did a "losing money" project. On the face of it, the subsidy for individual members may indeed be ten or even dozens of times higher than the membership dues paid by users; but from a deep point of view,The practice of gathering high-value users regardless of cost enables this membership system to have the dual advantages of enhancing platform stickiness and fast fission transmission at the same time, and expand more imagination at the game level.

Do not care about the loss of "money" on the book, but based on the long-term value to the platform and partners. What can be confirmed is that the value of this continuous loss-making BABA 88VIP membership project will inevitably show more clearly with the evolution of e-commerce ecology in the future.