Each year, brands eye Singles’ Day in anticipation, hoping that the shopping bonanza will propel them to greater heights in the world’s second-largest economy.
This year is not so different, with one million brands and merchants participating across Alibaba’s marketplaces alone. From October 24 to November 11, Alibaba Group expects 1 billion consumers to shop and 80 million products to be offered at their lowest price of the year.
Luxury brands, too, are in on the action. More than 200 luxury brands have joined Tmall’s Double 11 festivities, including Kering’s flagship label Gucci for the first time. The five major luxury giants — LVMH, Richemont, Kering, Hermès, and Chanel — have released 100,000 new products altogether, including limited edition items, co-branded models, and highly collectible, out-of-stock pieces.
With Singles’ Day regularly surpassing Black Friday and Cyber Monday’s combined sales, how are luxury brands capitalizing on the lucrative e-commerce event?
Luxury brands ramp up discounts and other deals
Ahead of the Spring Festival, which falls on February 10, 2024 and ushers in the Year of the Dragon, high-end houses are releasing products themed after the Chinese zodiac sign. There’s the Vacheron Constantin Year of the Dragon watch, the IWC Portugieser Dragon Year watch, and the Baccarat Be@rbrick 2024 Dragon limited edition figurine, to name a few.
In addition to exclusive products, luxury businesses are also offering various benefits this year. For example, Gucci and Burberry are attracting Tmall shoppers with a 24-month interest-free installment payment plan.
“Typically, we see the higher-end brands that will never offer discounts leveraging only the free installment offering,” says Thomas Piachaud, Head of Strategy at Re-Hub. “The financing of these installments is covered by the brand, but at the same time, it gives them access to priority search placements and the 11.11 banner.”
And of course, there are price promotions. Though not a new tactic, Piachaud notes that some brands that do offer discounts are increasing the assortment they are discounting, from marking down roughly 10 percent of their portfolio during last year’s pre-sales period to slashing prices on more than 50 percent of their portfolio in 2023.
While a tried-and-true formula for driving traffic and clearing inventory, discounting can be a double-edged sword.
“On the one hand, it is a period of brand discovery, and brands can attract new consumers to the brand and build long-lasting connections with these consumers,” Piachaud says. “However, the flip side is that you can create an expectation from consumers that your products should be discounted heavily.”
Tmall takes luxury brand experiences online
To prevent brand dilution, it is important to maintain an elevated presence, even online. Cue Tmall Luxury Pavilion.
Tmall Luxury Pavilion has worked to enhance this year’s shopping experience. For starters, more than 110 brands, including Gucci and Prada, have launched luxury gift customization services on the platform, such as packaging, product engraving, and 3D gift cards. There’s also a “Luxury Gift Window Shop” feature, where shoppers can win brand gifts from the likes of Bulgari and Bottega Veneta by completing quizzes and tasks.
To further cultivate customer relationships, Tmall offers various livestreaming services. About 60 brands are livestreaming on Tmall this year, one of which is MCM; according to Alibaba, the German luxury label saw livestream sales on October 31 surge sixfold from the same period last year.
Meanwhile, over 20 luxury brands are utilizing Tmall’s one-on-one livestreaming feature, whereby sales associates engage with customers in private sessions. This has a conversion rate that is four times higher than text-based customer service, the company adds.
“By utilizing livestreaming, tailored services, and immersive experiences, brands can gain a better understanding of consumer preferences and needs,” says Janet Wang, Head of Tmall Luxury Pavilion. “Additionally, by leveraging the data support of the platform, it is possible to achieve personalized recommendations for thousands of individuals, thereby increasing sales conversion.”
Notably, there’s more infrastructure for artificial intelligence (AI) this year. Six brands — Valentino, Ralph Lauren, Canada Goose, Coach, MCM, and Baccarat — have collaborated with Tmall to create cat-themed posters and animations sporting their distinctive brand features using AI technology. On November 7, three luxury brands will partner with China’s popular AI photo generator, Miaoya Camera, to enable consumers to generate digital avatars of themselves wearing the branded clothing.
Chinese shoppers demanding more value from luxury
Despite concerns about China’s slowing economic growth, pre-sale figures show that luxury consumers are still eager to spend.
On October 31, the number of consumers who flocked to Tmall in the first hour of sales to purchase luxury products was 1.5 times that of the same period last year, according to Alibaba. That same day, the sales volume for more than 20 luxury brands, including Gucci, Burberry, and Ralph Lauren, in the first hour exceeded that of the whole day last year.
That said, Anaïs Bournonville, co-founder of French-Chinese marketing agency Reverse Group, notes a few changes in luxury consumption, particularly an increasing focus on value.
“We noticed less frenetic enthusiasm around Double 11 this year and wiser purchases,” Bournonville says. “The local consumer is becoming more mature towards this festival, moving away from the frenzied shopping experience to a rational selection of where and how to benefit from these discounts.”
“We noticed less frenetic enthusiasm around Double 11 this year and wiser purchases. The local consumer is becoming more mature towards this festival, moving away from the frenzied shopping experience to a rational selection of where and how to benefit from these discounts.”
Meanwhile, different categories like jewelry and home appliances are gaining attention. According to Wang, “the first batch of Gen Z is experiencing a ‘marriage wave’ and choosing Double 11 to purchase high-quality wedding items or gifts on Tmall Luxury Pavilion,” adding that Gen Z was responsible for more than 70 percent of sales for products like Jimmy Choo wedding shoes and Chopard’s Ice Cube gold rings.
Is Singles’ Day losing its shine?
Although there is less enthusiasm around big shopping festivals than in years’ past, this doesn’t mean that consumers aren’t willing to splurge. Rather, the festival’s role in the marketing calendar has changed.
“Single’s Day used to be the must-go-to festival in any China strategy. It was also the reason for several brands to enter the market, building their China strategy around this KSP (Key Shopping Festival),” Bournonville says. “Today, the festival is not center stage because there are many more opportunities to capitalize on during the year.”
Whether it’s launching new products, boosting brand awareness, or boosting fourth-quarter earnings, Double 11 remains a key business opportunity for luxury brands. But, as Bournonville reminds us, it’s just one of the many ways to win over Chinese consumers.