The Chronicles of Alibaba Singles Day - Part 1
It is Alibaba Singles Day time again on Outside In! I am sure some of you will be excited to read up some more about this ‘global shopping festival’, while some of you will probably go “Not again!” Yes, there were 3 pieces related to the event last year on Outside In and, curiously, I think I have enough stuff this time around even to cover 2 or 3 editions over the next 2-3 weeks – leading to the festival!
You can catch up on last year’s editions here at:
1) Alibaba Singles Day - Preparations 2020:
2) Alibaba Singles Day - Unilever 11.11 Strategy:
3) Alibaba Singles Day - Impressions 2020:
One might wonder…why is Outside In covering such an extensive coverage of the Alibaba Singles Day Festival? Yes, 6 out of 60 pieces so far is literally 10% of all the stuff that will be released. Simply put, I think it is an event that is unparalleled in our lifetimes. It not only reflects peak consumerism but even truly exhibits every retailer & service provider’s ability to deliver it – seamlessly – via digital excellence. So, maybe I am truly thrilled not only as a customer to witness this grand shopping extravaganza but possibly even as a retailer (and a service provider) that is able to witness industry best practices at play – at an unmatched scale!
This year, though, Outside In is traversing a different path of studying Alibaba and the Singles Day phenomenon. We are going to go back in (short) history to explore how the whole journey came into being… From the first edition to the latest. How it all began…and how far has it reached. Join me to read the Chronicles of Alibaba Singles Day…
Context for the Singles Day Sale Success
There are 3 extraordinary features of retailing in China that goes beyond the sheer scale of the sector anywhere else in the world, which to a large extent is a function of having a large consumer base:
Much of their shopping happens online – via mobiles – which are ubiquitous as the go-to-device for accessing shopping “super apps” that link browsing, discovery, sharing and buying
Digital Commerce has not just survived the Covid pandemic but has actually benefited from it
For many shoppers, spending is intensely focused on key dates – the newly created “shopping festivals” – which often span from 24 hours to several weeks – and have become firm fixtures on consumer’s calendars
E-commerce now accounts for over 25% of all of retail sales and thereby over 50% of world’s total e-commerce sale now happens in China. Put simply, once Chinese consumers go online, they go shopping. Mobile devices generate 80% of all e-commerce sales compared with 36% for the rest of the world. Also, there is widespread usage of digital payment services in China with 80% of mobile users using mobile payments. A single national language and currency have made it easy for shopping, payment, chat and entertainment platforms to reach a massive consumer base, often as a part of a single “super app”. The China Internet Report 2020 shows that Chinese internet users were spending an average of 7.2 hours online every day, a sharp increase from 5.6 hours daily in the previous year
Between them, Alibaba, JD.com and Pinduoduo’s share of retail e-commerce is tipped to rise from 80.3% to 83.6% post the pandemic. There is much potential remaining in the China market, as existing online shoppers spend more and new consumers connect to the internet – and as millions of Chinese join the ranks of the middle class in the days to come
Rise of Consumer Potential
Modern China has seen a rapid rise in number of middle class households – leading to a surge of excitement around consumerism. It has over 4 million seven-figure households. This level of wealth is far from average, but even ordinary consumers feeling relatively affluent – are spending on their homes, on themselves, on dining out and on gifts
Legacy of Ganji (Market Days)
While the e-commerce shopping festivals of today are a new invention, there’s evidence that their success stems from an ancient tradition of gathering for festive shopping events that take place on specific days in a year – called ganji – or market days – which have existed for thousands of years. Travelling traders would stop in different villages on different days of the month; residents would look forward to ganji – not just as an opportunity to buy essential goods but also to join a social, festival occasion. Friends and family from nearby villages would go together to the market – it was a big day, the happiest day of the month. It is still part of their culture and tradition. According to Dr. Ivy Dang of HKU Business School, today’s e-commerce festivals are the digital equivalent of “ganji”. They have succeeded, because just like ganji, they unite 2 key offerings: the shopping and the festival
Home of the Shopping Festival
A History of Celebration
Shopping festivals are incredibly intense, exciting and often frantic experiences for consumers in which a huge volume of goods and services are traded – often at special prices or with limited-edition gifts or bundles, and all in a race against the clock
There’s much more to these festivals than the shopping alone: they have become shared experiences that take place both online and offline and are enjoyed with friends, family and even celebrities. And, they’re now as much about entertainment and discovery as they are about getting a bargain
From Golden Weeks to Shopping Festivals
In 2000, the Chinese government created “Golden Week” holiday periods to coincide with 2 important national holidays – Labor Day in May and Republic Day in October. This move came at a time when the government was looking to reorient the national economy by stimulating a national demand of goods and services, in turn reducing the country’s reliance on exports. Reforms in 2008 adjusted the calendar with the aim of satisfying two goals: growth and stability
These Golden Weeks were associated with shopping, while traditional Chinese holidays were more about family reunions and dining together. These government-created festivals laid the groundwork for the shopping festivals that would be created by private companies successfully in years to come
Links to Consumer Behaviour
Golden Weeks made the crucial link in consumer’s lives between key dates and reasons to spend, and sowed the seeds for shopping to become a shared experience enjoyed not only by people’s friends and family, but by the nation as a whole and at once. New-release products created for Golden Weeks helped “train” consumers to anticipate special offers from brands and retailers. But what took these consumers from big-spending Golden Weeks to the mega-spending shopping festivals of today was the simultaneous rise of internet connectivity and e-commerce
Dr. Ivy Dang (again) suggests that “all festivals tap into human nature, the need to gather together. We are social beings and we love to celebrate things together; being together generates happiness. And, of course, with the shopping festivals, there’s usually a discount of some kind, and that is still very important as well”
The Emergence of Alibaba Singles Day (11.11) Shopping Festival
According to Dr. Ivy Dang (yet again), shopping festivals’ success now is all about how they’ve evolved into a real festival, like a celebration of shopping. Back in 2009, it was all about the promotions and most Chinese shoppers were price-sensitive. They joined in because it was cheap
Journey Snapshots
In 2009, Alibaba held the world’s first mass-scale, brand-created shopping festival. Only 27 brands participated in this first Singles Day sale but the response from consumers was tremendous – with total GMV of around RMB 52 million, surpassing average daily GMV of RMB 8 million – indicating to them that they were onto something
In 2011, Alibaba invested in cloud computing infrastructure and logistics systems to meet the unprecedented spike in traffic, orders and payments – to handle fast growing sales volumes
In 2013, it founded its dedicated logistics arms Cainiao – when it took them an average of 9 days to deliver one billion packages. By 2018, that time was reduced to 2.5 days – thanks to improved warehousing and delivery technology
By 2015, it became a celebration of more than 180,000 brands on Alibaba’s platforms, including thousands of international brands, with a total GMV reaching $30.8 billion
In 2015, the first live 11.11 countdown gala was held – seen in the flesh by a few thousand lucky ticket-holders and watched avidly online and on national television by everyone else. These live events began to bring a series of A-list stars from music, film and sport – both local and international ones
The events have a ‘play along at home’ elements that incentivizes consumers at home to keep watching, by rewarding them with coupons and discounts on their 11.11 shopping
The 11.11 festival also includes a ‘see now, buy now’ fashion show, allowing consumers to buy the latest-release fashions as they come down the runaway – in real time. The show lasts several hours and features the latest collections from Chinese and international brands
In 2016, Alibaba added an AR (augmented reality) game into the mix called ‘Catch the Cat’ – where the game linked with brands – including Starbucks and KFC – as well as brick-and-mortar shopping malls – to drive gamers into their stores for special 11.11 promotions. It was played by more than 70 million people
In 2018, the 11.11 gala saw performances by Cirque de Soleil and Mariah Carey – amid an hour-long entertainment program that also featured a basketball match overseen by NBA star Allen Iverson. Other international celebrities featured in the 11.11 galas include Miranda Kerr, Daniel Craig, David & Victoria Beckham and Kobe Bryant
In 2019, Taylor Swift appeared among an all-star cast and the gala was beamed live from Shanghai’s Mercedes Benz stadium to 106 countries, coordinated by a crack team of 300 technical personnel
In 2020, Alibaba’s total 11.11 sales topped $74 billion – smashing the previous year’s record by an impressive 26% - even on that big base
I think there’s this excitement about it that I think is key in the human psyche. It’s like a festival and a social experience and a cultural phenomenon that’s so much bigger than just buying a product. – Benji Lamb, Director of China and South Asia, Vitabiotics
While the climax of Singles Day Sale is still the 24-hour extravaganza, it has expanded because there aren’t enough hours in one day for everyone to look at what they need to buy. So, a range of pre-11.11 initiatives have now turned the one-day festival into a week-long event
The pre-11.11 days are mostly about grabbing eyeballs, as shoppers used the time for wish-listing and saving products for a later date – 11.11 – when prices would further drop – and/or they’re putting down deposits to secure the ‘pre-heat’ pricing. During the peak of 11.11, focus is directing people towards ‘hero’ products – especially towards uniquely bundled products – where mostly new items are introduced with hero products
It has become a truly national event and one that takes place online as well as offline – everywhere. In November each year, shopping strips and malls all over China are packed with specially created events, offers and incentives to spend
In Conclusion
Shopping festivals have now become an integral part of China’s retail identity and are shaping the future of Chinese retail
And Alibaba is leading that phenomenon from the front: China’s single biggest shopping festival – Alibaba Singles Day (11.11 each year) – delivers more sales than the 4 biggest US shopping days combined.
Let that just sink in… Till my next Edition…
References and Sources:
1. WPP and Alibaba Group Report – Dates with Destiny