The biggest shopping day of the year, globally, is China's November 11, so-called "Singles' Day." As e-commerce titan Alibaba, which invented the holiday ten years ago, pushes to surpass last year’s blockbuster 25 billion in sales, it will face tough challenges. Here are three ways 2018 will be different, according to e-commerce experts. Changes include a richer menu of choices for buyers – travel packages and theater tickets are expected to be popular – and more luxury retailers and brands taking part.
At first glance, Alibaba’s Singles Day sales record last year is astonishing – it’s nearly four times that of the U.S.’s Cyber Monday sales in 2017. Meanwhile, Alibaba’s local competitor JD.com came close to that record during this year’s June 18 shopping holiday (another self-made holiday invented by JD.com in 2011). However, last year’s sales record was the result of more than 20 days of promotions, as consumers were given the Singles’ Day offers in advance to lock in prices. For example, there are 500,000 items for pre-order on Tmall this year, but it is only on November 11 that those pre-orders will be processed, which ensures a sizable portion of sales to be counted towards the final number ahead of time.
Alibaba chief executive Daniel Zhang said this year’s edition of Singles’ Day will be “bigger and more successful than in previous years,” with 180,000 participating brands joining the festival just on Alibaba. And while the single’s day promotion was originally launched to encourage uncoupled shoppers to splurge on themselves, it’s become an international spending spree.
While shopping holidays have been long dominated by big players (during last year’s Singles’ Day, Alibaba and JD accounted for 66.2 percent and 21.4 percent of sales, respectively), the proportion of sales from them fell slightly from the year before. This year it’s expected that more diverse players will split the pie.
For example, some predict that the newly listed e-commerce platform Pinduoduo, which is built on the deep-discount business model, might be able to stand up against Alibaba, and the battle for market share has already heated up. Ahead of the festival this year, Pinduoduo co-founder Dada accused Tmall of pressuring brands to sign exclusive deals, a similar accusation that JD.com has made before.
Ricca Huang, marketing manager of e-commerce firm Azoya Group added: “Social commerce players such as Pinduoduo, Yunji, and Little Red Book may enjoy remarkable growth. It will also be outstanding if we are able to take a look at sales generated through WeChat mini-programs.”
This year also marks the first Singles' Day event for the British luxury e-commerce player Farfetch after it formed the partnership with China's JD.com and acquired a local digital marketing agency. In the lead-up to it, Farfetch has rolled out a series of localized offerings on its e-commerce app, website and WeChat mini-program store.
Meanwhile, facing this increasing competition, Alibaba has a new goal in expanding its market share – reaching consumers beyond China. The company has is expanding overseas through Lazada, the Southeast Asian platform owned by Alibaba, and bringing Singles’ Day promotions to Singapore, Malaysia, Thailand, Indonesia, the Philippines, and Vietnam for the first time this year.
Last year, the top-selling items on Tmall were marketed specifically to women (e.g., beauty, skincare, and mobile phones). This year, it might look a bit different – “It’s not just about purchasing products,” said Pascal Martin, the partner at OCamp;C Strategy Consultants. “It’s also increasingly about purchasing a variety of services, from videos on Youku to mobile games on UC, theater tickets on Taopiaopiao, music on Xiaomi music, travel on Fliggy, etc.” While these products were available last year, the demand is expected to increase this year.
While cross-border import sales account for a relatively low proportion of the total, some analysts believe cross-border sales will be another area of growth with major e-tailers pushing for greater sales from international suppliers. For example, Azoya’s Huang noted that JD.com has “shopping abroad” as one of nine categories on the site, and Tmall highlights its Tmall Global platform in the banner of the front page to attract more traffic.
This year Alibaba will continue to deepen its New Retail initiative that started last year. In its Q2 2019 (quarter ending September 30, 2018) earnings released last Friday, the group said it "will unleash the synergies of online/offline integration...in 200,000 smart stores in China across multiple retail categories.”
JD.com also is fully prepared to test its own retail solution, “boundaryless retail,” during this year’s Singles’ Day event. Through its smart supply chain and big data system, the e-commerce player will reportedly support its online and offline partners to anticipate Chinese consumer demand and handle hundreds of thousands of orders.
“The delivery time from JD.com during Singles’ Day will continue to be within 24 hours thanks to our advanced supply chain and logistics system,” said Chen Zhang, Chief Technology Officer of JD.com.
Besides Alibaba and JD.com, there will be more players offering better O2O experience. Huang from Azoya highlighted retailer Suning’s door-to-door delivery service as well as WeChat mini-programs that will support companies’ physical stores.
The astonishing sales numbers may have lured many international brands to join, especially in the luxury sector, but it’s important to note that not every brand will see an immediate return. In fact, driven by deep discounts, many consumers tend to make impulsive purchases but later return those products, which could be a challenge for both brands and Alibaba.
Brands have shared their concerns, according to overseas e-commerce platform BorderX Lab. A lot of merchants complained to the platform that last year’s Singles’ Day was unprofitable. “Due to deeply discounted pre-buys, it cannibalized normal early fourth-quarter sales [for brands],” recalled Jeff Unze, president of strategic partnerships at BorderX Lab.
Industry experts from Dentsu China Group noted luxury brands seemed to be more open-minded about Singles’ Day this year. Traditionally, the focus on offering massive discounts and coupons to Chinese consumers has left luxury players reluctant to participate. But a number of premium beauty labels and retailers such as Yves Saint Laurent and Sephora have launched special packages to capitalize on the shopping fever. It indicates how brands have altered their expectations for this holiday – seeing it as a marketing opportunity more than a sales opportunity.