(Yicai) Aug. 14 -- Members-only retail warehouse chains Freshippo X, operated by Chinese e-commerce giant Alibaba Group Holding, and Sam’s Club, owned by US retail giant Walmart, are engaged in a price war in China to win over more customers as competition intensifies.

Rivalry between two firms, which had an customer overlap rate of 43.1 percent in June, is heated. Sam’s Club China had four million members as of November 2021, while Freshippo had 3 million X members as of March.

Sam’s Club China outstrips Freshippo in terms of number of outlets, with 50 across 14 provinces as of June 2021 compared with Shanghai-based Freshippo’s nine in March, according to mobile app data platform Moonfox. But Freshippo’s penetration rate is 2 percent higher than Arkansas-based Sam’s Club and it has a more stable monthly passenger footfall.

The two firms are offering huge discounts on certain products. For example, Sam’s Club has slashed the price of its durian mille-feuille cakes by 34 percent to CNY85 (USD11) per one kilogram box, and Freshippo has trimmed its price by 20 percent to CNY79. And there is now just CNY1 (USD0.14) difference between the prices of their Thai Chang soda water and New Zealand Zespri kiwifruit.

The price war though is mainly concentrated in the two retailers’ private brands which are key to winning over customers, retaining loyalty and distinguishing between the two companies. Own labels have a higher profit margin and the firms’ have better control over the supply chain and quality.

Sam’s Clubs sales of its own labels accounted for 30 percent of total sales in 2020 and the proportion has continued to grow, said Zhang Qing, chief purchasing officer of Sam’s Club China. And private brands accounted for 35 percent of Freshippo’s sales in 2022.

Editor: Kim Taylor