Can you get your head around figures like these?
Singles Day once again proved that it is the world’s largest shopping festival. A GMV (gross merchandise value) on Alibaba of 498.2 billion RMB and on JD of 271.5 billion RMB for the Singles Day shopping festival. Together these 2 largest ecommerce platforms in total translate to around €98.4 billion or £88.24 billion…and that’s without taking any of the “smaller” platforms into account.
Just to put that into perspective, it’s comparable to the GDP of Lithuania.
Alibaba Festival Facts and Figures
This year’s event at Alibaba had the highest-ever turnout from both consumers and brands, with more than 800 million users and 250,000 brands participating. Over 31000 overseas brands participated and 2600 brands were involved for the first time.
As always, the sheer size of an event in China feels overwhelming to anyone who isn’t a China watcher. There were Douyin (=TikTok) videos of delivery guys shovelling parcels because the numbers were just so huge. At the peak time, over 583000 orders PER SECOND were created!
How does any brand get itself noticed in that crowd?
Livestreaming was the key this year to appeal to and engage China’s young Millennials and Gen-Z shoppers. On Alibaba this included Earvin “Magic” Johnson, Taylor Swift and Selena Gomez. In this interview by Alibaba, influencer Gillian Lang and her livestreaming partner Alec Lu, explain why livestreaming has become so essential in China.
Why was 2020 different from previous years?
This year Double 11 (11.11) or Singles Day wasn’t just a one-day extravaganza but a whole shopping season. That makes it difficult to really compare the figures with previous years. Whilst it was originally conceived by the Alibaba Group, Singles Day has been adopted by all the major online platforms and also many offline outlets. Of course, it’s originally in China, but in the meantime it has spread across Asia and you can also find stores jumping on the bandwagon for additional promotions in Europe. The world’s largest shopping festival reached around 800 million consumers in China alone.
What does that actually mean for brands?
The 11.11 shopping festival may make up 40-50% of a brand’s turnover on the relevant platform in China, however the GMV doesn’t tell the whole story.
The discounts offered for products purchased during the festival can be huge. It’s not just price discounts though, but also coupons and other incentives to consumers. On top of that brands have to pay the marketing investments necessary to gain visibility in an extremely noisy space. One huge expenditure can be a KOL as mentioned above. For smaller brands it can really be a hard line to walk to:
- maintain some kind of profitability
- Keep brand positioning guidelines
- Reach the sales targets the platforms are pressing you for
So why do it?
As with any kind of overseas business, having the right partners to guide you through the jungle of such events is essential. On the other hand, the potential for growth is enormous. Brands who achieve stellar results in the Singles Day festival can ride the wave of popularity for the year ahead and build on their results. This can be a key success factor if you are doing cross-border ecommerce, representing up to 40 or 50% of your annual turnover.
What are the implications of the world’s largest shopping festival?
China watchers will be analysing the results in detail over the coming weeks. To a certain extent this shopping festival is a barometer of China’s economic recovery following Covid-19. The World Bank has forecast that China’s economy may grow by 1.9% in 2020, however some observers already believe that 11.11 might not have been so successful for Alibaba as in the past. It appears that the results might be lower than what they achieved at the rival 618 festival in June, initiated by arch-rival JD.
For sure the next few months will be interesting for anyone interested in the Ali Group. Last week Ant Financial were forced to postpone their Shanghai and Singapore IPOs. Now this week the authorities announced new regulatory changes for the online space. The authorities would like to prevent “monopoly-like” behaviour. The draft rules could apply to Tmall, Taobao, JD, PinDuoDuo, Kuaishou, WeChat Pay and others.
These rules come after China’s Financial Stability Committee highlighted the need to ensure fair competition and strengthen anti-monopoly law enforcement last month.
The draft regulations prevent “choose one between two” practices, whereby a marketplace restricts brands from selling on multiple platforms. Alibaba (along with at least 20 other tech platforms) have been previously accused of adopting such practices.
Update 2021: Alibaba Group was fined $2.5 billion for anti-trust activities, contributing to a more subdued Singles Day 2021, although it remains the world’s largest shopping festival.
As always in China, there’s always something new going on…Companies will adapt and find solutions to take any changes in their stride.
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