---
title: "What Gives Sam's Club the Confidence Behind Its 'Sky-High Priced Instant Noodles'?"
description: "Sam's Club is a massive buying system that precisely provides members with products within their needs. Recently, its giant instant noodle bucket, priced at 168 yuan, was resold by scalpers for 1999 yuan, yet the company's value-for-money strategy has proven successful both legally and logically."
author: "王识钦"
publisher: "New Distribution"
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published: "2023-07-24"
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# What Gives Sam's Club the Confidence Behind Its 'Sky-High Priced Instant Noodles'?

> Sam's Club is a massive buying system that precisely provides members with products within their needs. Recently, its giant instant noodle bucket, priced at 168 yuan, was resold by scalpers for 1999 yuan, yet the company's value-for-money strategy has proven successful both legally and logically.

**Introduction: Sam's Club is a massive buying system that precisely provides members with products within their needs.**
**Author** | Wang Shiqin  **Review** | Gou Gou  **Layout** | He Wen
Recently, Sam's Club has been in the spotlight again, and for no other reason than their giant instant noodle bucket being in such high demand that scalpers have driven the price up to 1999 yuan. It's worth noting that the original price of this product is only 168 yuan, with a purchase limit of two buckets per person.
My habit of observing the retail industry gives me a more forward-looking perspective. Setting aside marketing and the noise, the 168-yuan noodle bucket can be described as excellent value for money. Inside the bucket are dozens of flavors, and on average, each pack of noodles costs just a few yuan. Is it expensive? Actually, it's not.
The Shenzhen market regulatory department also concluded an investigation: the noodle bucket (World Cup Noodles Classic Flavor Combination) sold by Sam's Club was purchased through formal channels, priced at 168 yuan per bucket, with no significant difference in unit price or quality compared to regular packaging. **The sale was part of the opening activities of the Qianhai Sam's Club store, and there was no malicious price inflation during the sales process.**
This means that Sam's extreme cost-performance strategy has achieved great success both in reason and in law. The profit model has been fully validated, and the next step is replication. The membership store format may seem bustling, but the landscape has already been drawn. As a top player, Sam's not only entered early but has also developed a set of effective strategies.
So where does their confidence come from?
**What is the core of Sam's Club?**
On June 29 this year, the largest standalone Sam's flagship store in the Guangdong-Hong Kong-Macao Greater Bay Area officially opened in Qianhai, attracting Shenzhen residents to shop and check in. I've seen the photos; it was packed with people.
In a time of slowing economic growth, why does Sam's Club stand out like Popeye? Especially for traditional hypermarkets, membership stores are essentially a dimensionality reduction attack.
Sam's Club originated from the hypermarket model. While hypermarkets were still battling Carrefour, Walmart seemed prescient, setting up its own localized membership store team in China, which became Sam's Club.
Qianhai Sam's is the 45th store in China, and "big" has been a constant theme throughout Sam's Club's history. In fact, as early as 1983, Sam Walton, one of the founders of Walmart in the United States, named this new membership store format after himself. The first Sam's Club in China opened in Shenzhen on August 12, 1996. This novel membership system intrigued consumers, but over time, it stabilized.
Why has Sam's Club begun to shine more than 20 years later?
This is closely related to the decline of traditional hypermarkets. In the early 21st century, although membership stores like Sam's and Metro existed, they didn't have an overwhelming advantage. Operations were routine, and membership card sales were ongoing. With the development of technological revolution, mobile internet began to spread.
This is one of the key points for the takeoff of offline membership stores. Many people don't understand that the trouble with offline membership stores isn't registration but management. With the development of smartphones, management has become exceptionally convenient.
Once the issue of who is a member is resolved, merchants can naturally focus on channels and supply sources. Now, Sam's Club is highly convenient. After registration, a QR code appears on your phone, and staff at the entrance scan it for quick entry.
In terms of logistics, Sam's meets various member needs through one-hour express delivery, city-wide delivery, and nationwide delivery services. This has directly led to record-high growth in Sam's membership, with renewal rates and activity levels continuously rising.
According to statistics, by 2022, Sam's Club in mainland China had nearly 4 million members, with members under 30 accounting for over 30%. Sam's earned over 1 billion yuan in membership fees alone. The membership system is also a significant profit point for Sam's, bringing extreme cost-performance.
As mentioned earlier, Sam's, a supermarket with American retail characteristics, was established 20 years after the U.S. baby boom, so "big" is Sam's main theme, also to cater to the multi-child American society.
American society is largely composed of extended families, emphasizing blood relations and family bonds, so Sam's focus is on "family." Unlike the low birth rates in East Asian retail formats like Japan and South Korea, portion sizes at Sam's have a strong American flavor. **In recent years, China has begun to enter an aging society, and relevant authorities encourage childbirth. The formation of the first batch of second-child families has led Chinese families to transition toward American-style family consumption patterns.**
Sam's giant packaging products are not new; they have been launched sporadically before. For example, a 4.5 kg Toblerone chocolate bar priced at 598 yuan, reportedly custom-made in Switzerland and produced only once a year. There's also a 1.5-meter-tall super bag of Lay's波浪薯片 (ruffled chips) priced at 298 yuan, containing 75 packs.
In my opinion, **the giant sizing of products is not a deliberate gimmick by Sam's but a cost-effective supply model based on the consumption habits of large families.**
In field observations, Sam's Club's target audience is indeed mainly family shoppers. A couple with two children driving a car to Sam's is the basic scenario, and they often bring their parents along. In other words, Sam's serves units of at least four people per family. Apart from couples, families are clearly the priority in Sam's supply chain.
The Shenzhen Qianhai Sam's store covers a total area of 62,000 square meters, equivalent to eight football fields, so you can imagine the variety of products. Sam's Club revolves around consumers: the entrance has a children's area, the middle has household goods, and downstairs is the food section, similar to the island layout of traditional hypermarkets. What's the difference? It's the product selection. **Sam's precise product selection logic**
Sam's product selection is both difficult and simple; it's essentially about selecting products around the family. Warehouse membership stores look like hypermarkets but are not the same game; they have extremely high requirements for the supply chain. Additionally, the professionalism of staff, the construction of the membership system, standardized operations management, and professional procurement management are all important factors that constrain the rapid growth of players in this format. **In simple terms, Sam's tests its product selection logic.**
Andrew Miles, President of Sam's Club China, said: "Sam's has been deeply rooted in China for 25 years, witnessing the rapid development of China's economic market and accompanying members in their pursuit of a higher quality of life. Sam's cherishes and thanks the trust of 4 million members." Four million members roughly equal 4 million families, at least 8-12 million people, which is about one-third of China's pan-middle-class. Therefore, centering on customers in product selection has become a necessary capability for Sam's.
Against the backdrop of second-child or even third-child families, changing the supply logic and promptly correcting consumer shopping logic has been put on the agenda. It's worth noting that China's aging and low birth rate don't apply to the pan-middle-class model; their willingness to have children is strong. That's why, during population aging, Sam's logic can rise against the trend. **The past two years happen to be when the first batch of second-child families' children are 4-5 years old, so various dealers doing "family" business have experienced a small boom.**
You might be surprised to learn that one of Sam's top ten supplier brands in China is Baldwin Pianos. Over three years, Sam's sold 2,000 pianos, each priced between 20,000 and 80,000 yuan, much cheaper than market prices. Estimating a median price of 50,000 yuan, sales reached nearly 100 million yuan. Therefore, I always emphasize that Sam's product selection logic must follow "family." From children to women to the elderly to men, it reflects the current consumption focus. "Sam's Cloud Home" is Sam's self-operated e-commerce platform, offering members curated outdoor sports equipment and supplies, pet products, jewelry, home furnishings, musical instruments, large children's toys, etc., leveraging a strong global supply chain to take care of consumers comprehensively. **Carefully selecting big brands while maintaining relatively ordinary prices is also one of Sam's secret weapons.**
Take Sony's PS5 as an example: Sam's price is very close to online prices on Tmall and Taobao, and many daily necessities are even exclusive to Sam's. For suppliers, how difficult is exclusivity? I don't need to elaborate; it achieves complete differentiation.
For popular categories like food, Sam's selection is more concentrated and diverse. As is well known, Sam's mainly captures consumer mindshare through meat, which is abundant and in large portions. Compared to similar products, the packaging is 2-3 times larger. For instance, the breakfast sausages I bought cost 68 yuan for 900g, while the same product online is at least 10 yuan more expensive. Sam's has an absolute price advantage.
Sam's also has its own insights into service. To give one example, in the fresh food section, there's ice you can put in your pocket to keep your purchased food cool. Long ago, industry insiders commented: Sam's is a massive buying system, like a concept store, precisely providing members with products within their needs. This sense of fulfillment is captivating. Combined with its supply chain efficiency, which breaks down product supply into raw materials, processing, packaging, warehousing, transportation, and sales, Walmart provides Sam's with a good foundation, but Sam's decides how to proceed.
The combination of online and offline has also become standard for membership stores. In September 2021, the Sam's App launched nationwide delivery, allowing consumers in cities without Sam's stores to become members. Moreover, Sam's not only has individual memberships but also commercial memberships for companies. During the "Double 11" period that year, Sam's e-commerce sales tripled compared to the same period in 2020. In short, Sam's has activated individual member loyalty and, through a strong supply chain, provided good merchant services, essentially group meals. The product selection logic is precision and excellence, presenting consumers with products that have already been screened several times.
Let me share my personal feeling: the product selection generally doesn't go beyond daily life, but it appears more cost-effective than usual, and the brands feel more upscale. In my opinion, while Sam's is good, there is still room for optimization.
**How to Optimize Sam's Club**
I read an article about the rise of purchasing agents for Sam's Club, and I think there are multiple reasons. On one hand, paid membership stores have barriers, such as Sam's regular membership annual fee of 260 yuan and卓越会员 (Executive membership) at 680 yuan, which keeps some consumers who don't want to pay from entering. On the other hand, warehouse membership stores sell large portions, and non-family consumers can't finish them. No joke, a box of Swiss rolls at Sam's has 16 pieces; if two people eat two each meal, it takes three days to finish.
From the current competitive situation, warehouse membership stores completely crush traditional hypermarkets. Perhaps Walmart had a premonition in 2015; how hypermarkets would save themselves is another story. In reality, Sam's purchasing agent system is now quite established, with some people earning 100,000 yuan a month. It has not only penetrated universities but also expanded to third- and fourth-tier cities. Could it go down to county towns in the future? That's possible. In other words, Sam's has visibility even in cities without Sam's stores.
University students buy Sam's products by finding purchasing agents. Joining a school's purchasing agent group is a basic operation, with a markup of 5-10 yuan per order. Whether large or small, the agent delivers in person, sometimes daily, to the school gate or even dormitory. Not just express delivery; even cooked food is delivered." According to media reports, on March 22, a Sam's group buy at a university attracted nearly 600 views and 50 participants. As of the end of January 2023, in the fourth fiscal quarter of fiscal 2023, Sam's Club net sales were $21.4 billion, up 11.3% year-over-year, with membership income up 7.1%. Among the top ten Sam's Club stores globally by sales, four are in China. **Chinese consumers' enthusiasm and the urgent need to upgrade consumption habits provide huge space for merchants to profit and also provide a basis for suppliers to supply.**
Purchasing agents and members fighting over products are serious problems Sam's currently faces. Members naturally complain: the same products are swept into carts by agents, which is a disaster for member families who drove dozens of minutes to Sam's to bond. It's worth noting that Sam's shopping carts are known for being large, at least three times bigger than typical supermarket carts.
In response to this issue, some netizens reported that when placing a fifth order on Sam's online mall, they were prompted: "Today's order count has exceeded personal living consumption needs; order failed." Sam's customer service responded that it was automatically detected by the system to prevent purchasing agent behavior, and it's a recent new rule. Meanwhile, some members encountered cashiers refusing to check out for purchasing agents.
**In fact, purchasing agents and members are two sides of the same coin for warehouse membership stores. For membership stores, having business in both peak and off-peak seasons is important.** The consumer demand represented by purchasing agents is also part of the business, so both purchase limits and complete laissez-faire are relatively passive approaches. My suggestion for warehouse membership stores is to open a purchasing agent business line with dedicated distribution, reserving some space for agents. Create a good shopping atmosphere and environment for members, have agents use dedicated channels to minimize crossover with members, and use technology to generate exclusive identifiers for agents. Given Sam's current store expansion strategy, purchasing agents will exist for a long time, and coordinating all parties will be a required course for Sam's in the future.
Warehouse membership stores continuously upgrade their formats and improve response capabilities, reflecting changes in consumption habits. Competition among imported brands like Metro and Costco and local Chinese brands is intensifying. Although consumer shopping demand is constantly bursting, the strong membership attribute of warehouse membership stores means that ultimately, brand recognition matters. Therefore, who can laugh last has become a key question on the desks of warehouse membership store companies.
**PS: If you have unique thoughts and insights on discount retail, or want to have in-depth exchanges with expert teachers, you can add WeChat and enter the communication group.**


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