For the last 13 years since it’s inauguration, Double 11 (11.11) has been a kind of barometer to show how China’s e-commerce market has been growing. 2021 singles day has been a little different at least for the originator of the festival, Alibaba. It felt like there was a lot less hype this year around the festival, especially with the pandemic still causing some of the most popular entertainment extravaganzas to be held purely online.
Yes, records were broken, but it wasn’t the extreme increase that Alibaba has become used to in the previous years and which many observers have come to expect from them. Look back at my analysis post from 2020 in order to see how the situation looked a year ago. More than anything, the whole atmosphere was completely different during this year’s event.
This year’s Double 11 in numbers
In the Alibaba ecosystem 290 000 merchants participated in the festival, of whom around 10% were international suppliers.
2020 Alibaba hit a GMV (gross merchandise volume) of $74.4 billion, and 2021, although it looked pretty flat compared to previous years, was another record GMV, with 8% growth (when calculated in RMB) and a value of $84.5 billion.
JD.COM, the biggest rival, achieved $54.6 billion – a pretty spectacular growth of 28% compared to last year.
…& that’s not counting the turnovers of all the other platforms and retailers who run promotions at this time.
The figures are huge – Singles Day is the world’s largest shopping festival, when you take into account all the activities carried out. This year I saw an increased number of campaigns running online in Europe and the UK, not to mention in South East Asia.
Livestreaming as a core driver of success
Within the first 15 hours of this year’s Double 11 shopping festival kicking off, the top 2 Taobao live-streaming anchors generated 18.9 billion yuan in pre-sales value. (That’s a whopping €2.54 billion for those who prefer to count in Euros, or around $3 billion)
Li Jiaqi (Austin): 10.652 billion yuan
Viya: 8.252 billion yuan
I’ve written before about the impact of livestreaming on Chinese ecommerce and there is no sign of this trend letting up. Compared to Europe and the US, the experiential factor is extremely high in China, rather than the often purely product based shopper journey online in other regions.
What did JD.com do well to account for their growth?
I think there were 5 main contributing elements to the JD success during this year’s shopping festival.
Fresh Store Concept
The Japanese company MUJI and Seven Fresh (JD’s offline store concept) opened a new flagship style collaboration in Shanghai. The grand opening on 11.11 & it provides fresh meal concepts in a 4000m2 fresh food complex in a shopping mall.
Focus on High Quality Consumption
China is the world’s largest luxury goods market and 2021 Singles Day was no exception to that: luxury goods, high end pet care, apparel, beauty, JD’s signature product group home appliances and medicine were all high growth categories on the platform. It’s worth noting that 77% of the consumers on JD came from lower tier cities – purchasing power there isn’t to be underestimated, as I’ve said before.
Technology & Logistics
JD has traditionally been extremely strong here. The addition of logistics parks powered by automation technologies further expanded JD’s rapid delivery service to even more locations, enabling the company to deliver JD’s retail orders within 24 hours in 93% counties and 84% villages in China. That is really a mind-boggling logistical achievement.
New energy vehicles (often autonomous), solar power systems & recyclable packaging have all contributed to help the company reduce carbon emissions by 26000 tons.
Focus on Services
2021 Singles Day there wasn’t just a focus on physical products but also on intangible services. These ranged from medical consultations – for both humans & pets – through to smart products designed to make life easier, especially for stressed city dwellers.
What were the reasons for the rather subdued Alibaba 2021 Singles Day growth rate?
In most countries around the world 8% growth year on year would be grounds for huge celebrations…not so for Alibaba. Celebrations were rather muted: it’s the first time they “only” had single digit growth for 2021 Singles Day.
So why did the Alibaba growth flatten off so much compared to their rivals? Some thoughts from my side that potentially all contributed to a certain extent.
Part of the natural business cycle
This was year 13 of the festival: at some point saturation is reached for any company and part of the normal business cycle. Of course, the base for calculating the % of growth is also higher each year. It’s considerably harder to add 20% onto $74 billion than onto eg. $3 million. In absolute terms, adding $10 billion in transaction revenue can hardly be seen as a bad result though!
Political and Legal Conflict
Antitrust measures in China mean that competitors have been growing far faster this year (I mean, those numbers are all mind-boggling) & Alibaba is perhaps treading more carefully after being fined an eye-watering (for me at least) $2.5 billion earlier in the year. The government has made several very clear statements that they will not tolerate market dominance by one player in any industry, and this certainly contributed to this year’s change in focus.
More Shopping Festivals than you can shake a stick at
There are now SO many “top” level shopping festivals (one almost every month) that 11.11 no longer is quite the novelty it once was. There are plenty of opportunities to get a bargain throughout the year & ALL of those campaigns promise to offer the lowest prices.
11.11 has traditionally been REALLY expensive for brands
Some brands potentially simply can’t afford (or are not willing to be blackmailed by the platforms) into ever higher effective discounts. This year, I heard about more brands than in previous campaigns sticking to their guns and not offering massive discounts affecting their brand equity.
Of course, you can offer other incentives such as free gifts or coupons without reducing your actual prices massively, but you probably need to have a certain brand position in order to do that & you should have supplies of your brand under control. It’s hard to do if 200 other companies are dumping parallel imports of your hero products into the market.
Xi Jinping’s call for “common prosperity”
The Beijing government has called for “common prosperity” to curb inequality and reduce excessive consumption. In the light of that, Alibaba stated before the shopping festival began that they would focus on sustainability, supporting charities and inclusivity. This can also be seen in some of the activities organised during the festival.
Muted Consumer Sentiment compared to previous year
Consumer sentiment is in some aspects a little subdued and whilst many enjoyed the entertainment aspect of the festival, at least a lot of my friends were less enthusiastic about actually purchasing this year. Many people found that the promotion mechanisms have become increasingly complex and simply didn’t want to jump through all the hoops necessary in order to get that additional 10RMB coupon. eg You need to collect a coupon before the 11th but activate some deposit on the D day in order to save 100 when you spend 400 unless you activate some kind of extra coupon .. 😵
Move to Social Commerce
To some extent consumers simply moved away from the purely ecommerce platforms such as Tmall and to KOL focused purchasing on social channels.
What did Alibaba focus on?
As I mentioned above sustainability, supporting charities and inclusivity were more in the foreground this year than merely breaking new sales records.
Luxury products, limited editions, NFTs, skin care – the list goes on. And of course the usual candidates such as infant formula were also popular product groups.
Alibaba targeted a cut of 30% in order related carbon emissions this year, and introduced a green products channel. This focus on sustainability is also in line with Beijing’s long-term goals of carbon neutrality by 2060.
On top of that, taobao introduced “senior mode” (larger fonts, targeted products & ads) to make it easier for elderly consumers to purchase. This was their inclusivity piece as mentioned above.
What does that mean for brands in the future?
For at least the last 11 years I’ve watched the figures in this shopping extravaganza and marvelled at the records in China and the extraordinary efforts needed by the teams involved to set the whole thing up successfully.
The logistics levels are just incredible, this is certainly something that Europe and the US could learn from China.
And finally this year there are perhaps signs that the Single’s Day phenomenon is coming of age and moving slightly away from pure consumerism. 11.11 is perhaps no longer just about bargain hunting and deep discounts. Things have evolved over the years and the festival now also offers entertainment and experiential shopping on a huge scale. Brands have to adapt their strategy each year if they want to remain relevant to fickle Chinese consumers.
As with all promotional activities, the definition of “success” depends on what you were trying to achieve. Brand awareness? Market share? Visibility? Turnover? If you can’t transfer success from a promotional campaign over to loyal customers for your regular offering then you need to rethink.
At the end of the day, when all the excitement dies down, the question for many brand owners will always be whether the turnover achieved was sustainable and profitable…? Those goals are not always compatible with Double 11 and the big platforms though 😉
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