Core Viewpoint - Sam's Club in China is facing challenges due to its large packaging strategy, which may not align with the consumption habits of smaller Chinese households, leading to potential waste and dissatisfaction among members [5][8][10]. Group 1: Sam's Club's Business Model - Sam's Club operates on a membership-based model, offering large quantities of products at lower unit prices, which is effective in the U.S. due to larger household sizes and storage spaces [7][8]. - The club's strategy of bulk purchasing allows it to reduce costs and maintain competitive pricing by leveraging economies of scale [7][8][9]. Group 2: Market Adaptation Challenges - In China, the average household size has decreased from 3.10 in 2010 to 2.62 in 2020, with a significant rise in one-person and two-person households, making bulk purchases less practical [8][9]. - The preference for fresh food and high shopping frequency among Chinese consumers contrasts with Sam's Club's model of infrequent, large purchases [9][10]. Group 3: Target Demographics - Sam's Club's primary customer base consists of urban middle-class consumers, with a significant portion of sales coming from food items, which are harder to consume in bulk [10][12]. - The average annual spending per member at Sam's Club is 14,000 yuan, which is significantly higher than that of other e-commerce platforms, indicating a strong but niche market [10][12]. Group 4: Consumer Behavior and Perception - The perception of value among members is tied to the quality and uniqueness of products offered, which can be undermined by the introduction of lower-quality items [12][13]. - The distance to Sam's Club locations and the large packaging sizes create barriers for frequent visits, leading to potential over-purchasing and waste [15][16]. Group 5: Marketing and Social Media Influence - Sam's Club has successfully leveraged social media to create a buzz around its products, appealing to younger consumers seeking a taste of middle-class lifestyle [12][13]. - The emergence of a "splitting and reselling" market for bulk items reflects the mismatch between Sam's Club's offerings and the needs of smaller households [12][13].

Core Insights - The rise of "county-level Sam's Club" stores in China reflects a significant shift in consumer behavior, with a growing demand for quality products in lower-tier cities [1][3][13] - The current market for purchasing Sam's Club products through agents has evolved, with physical stores emerging as a new business model to meet local consumer needs [1][5][12] Group 1: Market Dynamics - The emergence of agent-operated physical stores is driven by the increasing purchasing power in county-level markets, with retail sales in these areas rising from 36.8% to 38.8% from 2019 to 2024 [3][4] - Consumers in lower-tier cities are increasingly interested in premium products previously exclusive to first-tier cities, such as lululemon and Xiaomi SU7 [3][4] Group 2: Business Model and Profitability - Agent-operated stores offer advantages such as eliminating membership fees, providing a wider selection of products, and offering personalized services like repackaging [5][11] - Profitability for these stores relies on multiple revenue streams, including markup on products, rebates from Sam's Club, and membership fees [6][11] Group 3: Challenges and Risks - Despite the perceived success of agent-operated stores, many face challenges such as high competition from online platforms and the need to cover fixed costs like rent and utilities [9][11] - Legal risks are present, as operating under the Sam's Club name may lead to trademark infringement and regulatory compliance issues [12][15] Group 4: Strategic Considerations - The existence of agent-operated stores raises questions about why Sam's Club has not directly entered the county-level market, suggesting a strategic decision to allow agents to fill the gap [15][17] - The current trend indicates a shift from large warehouse retail models to more curated shopping experiences, which may not align with the operational costs of traditional membership stores in lower-density areas [17][18]