Plant a psychological anchor in consumers' minds, so that when they need a certain product or service, they will first think of you. This is what all retail enterprises aspire to achieve.

This is especially true for membership retail, which pursues closer connections with consumers.

When examining the mainstream players in this field, one can always find corresponding popular products. Sam's Club's cheese beef rolls, Costco's strawberry bears, M Member Store's taro cake, and 1 Member Store's edible raw eggs... These products that have successfully gained fame are the psychological anchors planted by enterprises in consumers' minds.

The logic behind this is simple: In the context of membership retail, differentiated and value-for-money products are the core driving force behind user payments and consumption.

"Good products are the key to customer trust. Now that our private label, One's Member, has achieved initial success, and our mindset of 'zero additives' has taken root, we will invest more resources in developing more unique and high-quality products with a better price-to-quality ratio in the future," said a relevant official from 1 Member Store.

Looking back on the past four years of transformation, officials from 1 Member Store have profound feelings about the journey.

In September 2020, 1 Member Store embarked on a new journey in membership e-commerce. On this untraveled path, there was little successful experience to draw upon, and the company had to grope its way forward on its own.

Over the course of four years, from the initial pains of transformation to the initial glimpses of the path, from small achievements to comprehensive mastery, 1 Member Store successfully produced 300 million edible raw eggs annually and several popular products. Its private label has accumulated over 600 high-quality products. Meanwhile, these efforts have garnered the paid support of nearly 3 million members.

Offline membership stores are a common topic of conversation, but when it comes to online paid membership e-commerce, 1 Member Store stands out as the only one of its kind globally and a successful example that has emerged in China. It is low-key yet dazzling, like a "chosen one" who keeps advancing through challenges, and its growth story is particularly fascinating.

An 'anti-human nature' transformation experiment

In August 1996, Sam's Club landed in Shenzhen, marking the beginning of the membership store story in the Chinese market. During its 28 years in China, 2020 was undoubtedly a crucial juncture, with Sam's Club opening five new stores in China in just the second half of that year alone.

In the same year, Costco spent 140 million yuan to acquire a 50,000-square-meter commercial plot in Suzhou for a new store. Foreign giants have seen the vast growth opportunities in China, and domestic enterprises are also stepping up their investments in membership retail. In October 2020, Hema opened its first X Member Store in Shanghai. The following year, Yonghui Supermarket, Hualian Comprehensive Supermarket, and Beiguo Supermarket all launched their own membership supermarkets.

1 Member Store also entered the market in 2020, but unlike other offline players who had precedents to follow, online membership e-commerce rooted in online scenarios had little successful experience to draw upon.

The reason why no one has done it before lies in the challenges it poses. According to relevant officials from 1 Member Store, the challenge of membership e-commerce lies in its "anti-human nature" nature.

At the cognitive level, market education is the first hurdle.

The internet has ingrained the concept of free services in people's minds, with various types of comprehensive and vertical e-commerce apps readily available. How to persuade users to pay a membership fee before making purchases? This runs counter to traditional perceptions. Moreover, other e-commerce apps offer an unlimited shelf, allowing users to search for any brand they want, whereas membership e-commerce requires a limited shelf of curated SKUs, making it even more difficult to persuade users to pay.

Meanwhile, the characteristics of online scenarios can impose certain limitations on business development.

For example, one of the advantages of offline supermarkets lies in the shopping experience, providing customers with an immersive physical environment where they can browse even without a specific need, stumble upon good products, and add them to their carts on impulse. Online shopping, on the other hand, typically involves searching with a clear need in mind, and once the target product is ordered, the transaction ends there. It is difficult to generate follow-up sales if customers exit the app casually.

Therefore, 1 Member Store's firm focus on online channels was bound to be a bumpy journey. According to the relevant official, "The first two years were very difficult. Most of our work was laying the foundation and exploring the initial stages of the model, such as planning our private label, connecting with suppliers, and recruiting staff."

Looking back now, the story's trajectory may be different from what many people initially predicted. As offline membership stores cooled off, 1 Member Store successfully broke through and successfully carried the banner of "the world's only paid membership e-commerce platform.""Perhaps it is precisely because we chose a difficult path and invested more energy in studying the market and building the necessary infrastructure that 1 Member Store was able to overcome the hurdles facing membership e-commerce and ensure sustained business improvement in today's rational consumer environment.

The secret behind 300 million annual sales of eggs

At the initial stage, all membership retail enterprises face a dilemma: Should they first build a membership base to support better product development, or should they first create good products to attract paid members?

Is it the chicken or the egg? 1 Member Store's answer is the egg.

Membership retail is a comprehensive competition involving the membership benefits system, private label system, supply chain system, and operation management system. Among them, the strongest perceptions for paying users are products and membership benefits. By delivering on these two points with edible raw eggs, 1 Member Store successfully leveraged nearly 3 million paid members.

Sam's Club's membership growth was slow in its first 20 years, and 1 Member Store was no exception. The relevant official recalled, "In the early stages, when we were trying to acquire new members, the cost of education was very high. We spent a lot of time and money on ground promotion, but we didn't find a good way to acquire new members until we started giving out eggs as a membership benefit.""12 boxes of edible raw eggs per year, a guaranteed benefit, planted the perception in people's minds that joining the membership would quickly pay for itself, successfully eliminating concerns about paying the membership fee.

If we calculate each box at its market price of 30 yuan, the total annual value would be 360 yuan. Is the 198-yuan annual fee for 1 Member Store worth it? All paid members can surely do the math. 1 Member Store is also dynamically adjusting its benefits to offer members richer and more valuable options. For example, during the cherry season, members who sign up for a membership can get 5 kg of cherries for just 1 yuan as a benefit.

This stands in stark contrast to the paid benefits offered by offline membership stores. Sam's Club's regular membership costs 260 yuan per year, Costco's Gold Star membership costs 299 yuan per year, and Hema's Gold membership costs 258 yuan per year, all of which are pricier than 1 Member Store's membership. In terms of benefits, paying for offline membership stores is like buying an admission ticket, with the focus on subsequent member-exclusive products.

However, 1 Member Store manages to strike a balance, offering both a guaranteed return on investment upon joining and a relentless pursuit of differentiation and value-for-money in member-exclusive products.

Taking edible raw eggs as an example, as the monthly member benefit product, its reputation will directly determine members' overall evaluation and perception of 1 Member Store. This product must undergo rigorous selection. In the process of selection, 1 Member Store explored and validated methodologies to enhance product competitiveness and successfully established a membership product system comprising over 300 zero-additive food products, over 600 One's Member private label products, and over 10,000 curated products across the platform.

Ultimately, it comes down to two words – simplicity.

1 Member Store is not concerned about revealing this secret to the public: "Our mission is to make shopping simpler for our members. How do we achieve this? First, by simplifying product selection; second, by simplifying price decisions; and third, by simplifying service guarantees.""Simplifying product selection involves curating products and retaining only the best SKUs in each category, so that users can find the most needed and highest-quality products with just one click. This requires the platform to have a deep understanding of both consumer needs and the market. The popular edible raw eggs product, for example, has recently been upgraded to include lutein in line with market trends.

The same logic applies to simplifying decision-making and service. By optimizing every aspect of the shopping experience, the platform ensures that consumers receive a "fast, good, and affordable" shopping journey. This is most evident in the dedicated compensation programs for high-volume, perishable products like eggs and fresh produce, which are prominently displayed to give customers a sense of simplicity and reassurance.

By keeping things simple in terms of products, prices, and services, 1 Member Store has created a near-perfect shopping experience. This innate drive to counteract inherent disadvantages has effectively offset the developmental resistance faced by membership e-commerce. By 2022, 1 Member Store had amassed 800,000 paid members, marking a significant advancement in its core capabilities since its nascent stages two years prior.""Moreover, based on practical exploration and accumulation, 1 Member Store has not only solidified its position in the membership retail sector but also laid a solid foundation for its future rapid growth.

A highly deterministic closed loop

With the ability to create popular products and attract paid members already in place, the next challenge is to sustain the current growth model.

As mentioned earlier, membership retail competition encompasses a multifaceted and systematic comparison of capabilities. While consolidating its individual strengths, 1 Member Store has organically coordinated its various capabilities to form a virtuous development loop characterized by high determinism.""Let's consider the development of One's Member, the private label. The efficient expansion of member-exclusive products from scratch and from one to many comprehensively reflects 1 Member Store's operational strength across products, benefits, supply chains, and operational management.""To better curate products, 1 Member Store determined from the outset of its transformation to assemble an experienced buying team. Currently comprising around 100 members, the team includes experts from various industries with deep insights into product development and operations, some hailing from factories and others from Sam's Club and other membership stores.""The assessment criteria for the buying team at 1 Member Store do not focus on GMV size but rather on the attractiveness of the products developed in each category, such as whether the number of active shoppers is continuously increasing. This operational management system fundamentally determines the boutique nature of member-exclusive products across the platform, where only the finest products can attract more target consumers.""Taking One's Member 4.0 lactoprotein fresh milk as an example, after thoroughly understanding the milk production industry, the buying team at 1 Member Store discovered that incorporating 4.0g of protein and INF instant sterilization technology, which balances nutrition and taste, adds approximately 1,000 yuan to the production cost per ton compared to regular milk. However, the premium for similar products on the market far exceeds this amount.""In contrast, One's Member 4.0 lactoprotein fresh milk offers superior quality at an affordable price, quickly gaining popularity among consumers due to its exceptional value for money. According to JD.com sales data, it ranks among the top five in the 3.6g+ protein category and tops the list among 4.0g protein milk products.""The significant differentiation and value-for-money advantages of these products are inseparable from 1 Member Store's close cooperation with its supply chain. The nearly 3 million paid members bring highly deterministic sales to 1 Member Store, which translates into scale benefits for the supply chain.""For instance, 1 Member Store's demand for high-protein milk currently stands at approximately 20,000 to 30,000 tons annually. In response, supply chain partners can provide dedicated pastures, factory production lines, and warehousing and transportation, reducing waste and improving efficiency at every step. This enables members to access more affordable and fresher milk. For example, the production and processing facility in Tianjin Haihe features dedicated production lines and uniform standards, eliminating the need for equipment adjustment costs and sunk costs resulting from downtime.""'Popular products directly determine the cost of the entire platform's offerings,' emphasized a relevant official from 1 Member Store. With the support of scale benefits, 'the larger the scale of popular products, the greater the room for discounts for users, further enhancing recognition of their value for money.'""Therefore, in the closed-loop business model of 1 Member Store, paid members receive guaranteed benefits and high-quality products, supply chain partners secure stable orders and growth, and the platform achieves deterministic and rapid growth. This mutually beneficial arrangement underpins the sustainable and efficient operation of the closed-loop system.""As the closed loop takes shape, 1 Member Store has entered a fast lane of growth, with impressive data serving as the strongest testament.""In terms of products, One's Member now offers over 600 exclusive and curated items, including over 300 zero-additive products, a leading scale in the industry. The mindset of 'zero additives' has also taken root in consumers' minds. These affordable and high-quality products are deeply loved by users, with the private label contributing 18% of GMV despite accounting for only 5% of SKUs, and even more significantly, over 30% in terms of sales volume.""In terms of paid membership, after reaching 800,000 members in 2022, 1 Member Store surpassed 1 million paid members in March 2023, taking just two and a half years to reach this milestone from zero. By October 2023, the number had surpassed 2 million, and today, 1 Member Store boasts nearly 3 million paid members.""For reference, it took Sam's Club 21 years to accumulate its first million members, another three years for the second million, and just nine months for the third million.""Racing ahead in the 'zero additives' lane

During the interview, relevant officials likened 1 Member Store to an 'elementary school student,' with Sam's Club and Costco as industry veterans and leaders, essentially serving as its best teachers.""The 'elementary school student' is catching up vigorously, particularly in terms of supply chains. The overlap between 1 Member Store's supply factories and Sam's Club's reaches 60%. In some aspects, the 'elementary school student' has already demonstrated its potential to surpass its predecessors, such as in its business strategy, which is more suited to Chinese households' consumption habits.""Many consumers online have complained about the large packaging and family sizes offered by membership stores. For instance, buying a large box of cookies from a membership store might take two months to consume, essentially occupying household inventory with bulk purchases. Consumers need to consider the consumption cycle and are prone to getting tired of the same products, affecting subsequent repurchases. In contrast, 1 Member Store adopts packaging suitable for Chinese families of three, reducing the consumption burden on customers and driving repeat purchases through positive product experiences.""What deserves even more emphasis is 1 Member Store's product development capabilities. Currently, popular products at other membership stores are still rooted in the consumption habits of European and American populations. As a local Chinese enterprise backed by JD Retail, 1 Member Store has a clear advantage in understanding Chinese consumer needs and mobilizing local supply chain resources.""One's Member's zero-additive product line is a key development area. Products like 'zero-additive humectants' and 'antibiotic-free' meat, poultry, and eggs, as well as zero-trans-fat bakery and snack items, are tailored to Chinese consumers' preferences. These products, which subtract ingredients and add quality, are highly popular among consumers.""Platform sales data show that sales of these products grew from approximately 30 to 40 million yuan in 2021 to over 100 million yuan in 2022, surging to over 600 million yuan in 2023 and projected to reach around 1.5 billion yuan this year.

The popularity of 0-addition products has far exceeded expectations, strongly proving the mutual commitment between 1st Membership Store and Chinese consumers.

In recent years, the trend from merely filling one's stomach to enjoying quality food has become increasingly prominent, with clean ingredients becoming a primary factor in many people's purchasing decisions. However, the market for 0-addition products is mixed, with some brands misleading consumers by falsely claiming 0-addition status for ingredients that were never present in the food in the first place.

1st Membership Store strictly demands of itself and seeks partnerships with high-quality supply chain partners to jointly expand the scope of 0-addition products to include fresh produce, snacks, beverages, and grain, oil, and seasoning categories.

Taking One's Member Sugar-Free Buffalo Milk Pudding Cake as an example, traditional buffalo milk cakes often contain preservatives such as sodium dehydroacetate, potassium sorbate, and sodium benzoate. Through joint development with the factory, 1st Membership Store has improved the recipe using traditional home baking techniques, achieving 0-addition while ensuring a springy and dense texture. While 0-addition often results in a shorter shelf life, 1st Membership Store leverages its high production and sales efficiency to ensure that consumers enjoy fresh, safe, and delicious 0-addition products.

At the same time, 1st Membership Store leverages its channel advantages to remind consumers about "clean ingredients" and enhance their understanding of 0-addition products. It has also established the industry's first "0-addition product selection standard." As both a market leader and educator, 1st Membership Store actively promotes the healthy development of 0-addition products from multiple dimensions and is poised to be the biggest beneficiary of the market's upcoming explosion.

According to relevant reports released by 1st Membership Store, the 80s and 90s generations are the main consumers of 0-addition products on the platform. Urban white-collar workers particularly seek out high-quality 0-addition foods, while 0-addition products also meet the refined parenting needs of the parent-infant group.

The relevant person in charge further emphasized, "0-addition is the core mindset of 1st Membership Store. When users think of buying 0-addition products, they choose us, whether it's for fresh produce, snacks, or anything else. 0-addition is the differentiating capability that 1st Membership Store has been strengthening and will continue to uphold in the future."

A Promise to 10 Million Paying Members

1st Membership Store has a clear vision for its future: to reach 10 million paying members within three years and become the preferred online platform for middle- to high-income families.

Based on industry data, the mainstream membership-based retail players in the Chinese market currently have paying member bases in the millions. Sam's Club has approximately 4.5 million paying members, while Hema has around 3 million. The influx of players in 2020 initially ignited the membership-based retail market. Reaching 10 million paying members will signify a true explosion in growth.

Theoretically, serving middle-class families is less demanding than serving a diverse population because the target group is more focused, and their needs are clearer. As stated by a relevant person in charge at 1st Membership Store, "China's market structure is complex, with numerous consumer groups. We're not aiming for the entire 1.4 billion-person market but rather focusing on our target user profile. This group numbers in the tens of millions in China, and by serving them well, we can build a substantial business."

However, the practical difficulties are far greater than anticipated. The development trends of offline membership stores provide a vivid illustration. In March and May of this year, Hema closed two of its X Membership Stores in Shanghai and Beijing, respectively. Metro also closed and renovated stores in Shanghai, Wuhan, Chengdu, and Beijing. Costco entered the Chinese market later and has expanded slowly, with the industry acknowledging that it has yet to fully adapt to the local market.

Clearly, Sam's Club's steady expansion and 1st Membership Store's rapid development have set benchmarks for membership-based retail in China, both offline and online.

Which player is most likely to be the first to reach the milestone of 10 million paying members? One approach worth considering is that details determine success or failure.

From an edible raw egg to a nutritious and delicious milk bottle, a safe and tasty cake, to a smaller snack pack, a common thread emerges: 1st Membership Store's emphasis on understanding and meeting the needs of Chinese consumers and its commitment to enhancing their quality of life through exceptional products and services.

Upon closer inspection of 1st Membership Store, it becomes evident that this "chosen one" has not always been inherently strong but rather driven by a relentless pursuit of excellence. It educates the market with predictable returns, ensures a seamless shopping experience, differentiates itself with 0-addition products, enhances value for money through cost reduction and efficiency gains, and drives sustainable growth through high certainty. While its growth story over the past four years can be summarized thus, its impact and lessons for the retail market extend far beyond that. This piques our curiosity about how the story will unfold as 1st Membership Store continues to break new ground in the membership e-commerce space.

This article is an original piece by Xiong Chumozhuyi. Please contact the author for authorization before reprinting. Violators will be prosecuted.