Annual record breaking double 11 online shopping festival sales figures are almost expected, but this year was different. Already last year in my round up, I mentioned that it seemed the sale had lost it’s shine, and in some ways that seems confirmed.
Does that mean that brands don’t need to both participating in the Singles Day bonanza? Not at all, it’s still an essential fixture in the Chinese ecommerce calendar, however after 14 years, the November shopping celebration is maturing and evolving. When there’s a major retail holiday virtually every month, it’s not sufficient to simply offer deep discounts – you need other methods and strategies.
Just to put it in context though, whilst no mega records may have been broken this year, it’s still worth around 3 times as much as Black Friday and Cyber Monday combined.
Shorter Presales period in 2022
Compared to last year, the official presales period started 3 days later on 24th October.
The 1st checkout period was from 8pm 31st October till 3rd November and the 2nd main sales period was 8pm 10th November until 11th November.
The 1 trillion RMB barrier broken for the 1st time during Singles Day 2022
According to Syntun, the GMV (gross merchandise value – or the value of the goods sold at their normal prices) across all platforms reached 1115.4 billion RMB – that’s a whopping €151.22 at today’s exchange rate (16.11.2022).
On the other hand, for the first time, the two largest platforms, Alibaba and JD.com haven’t confirmed their GMVs, so they can only be worked out from a variety of other sources, including the Syntun data.
The official statement from Alibaba was that sales were “in line with last year”.
Whilst there are no smashed sales records or major innovations as in previous years, the figures speak for themselves that Chinese consumers are still ready to buy.
A crowded retail holiday calendar
Once upon a time, the double 11 online shopping festival was the only major shopping festival, other than the Chinese New Year sales period, but those days are long gone. Then came a phase where there were a couple of huge shopping holidays and some smaller ones…but those have morphed into big shopping events virtually every month.
Brands are pressured to offer discounts on an almost ongoing basis meaning for many it became difficult to make a profit in the online ecommerce market.
Also, how do you squeeze yet more out of an event that already dwarves all other shopping holidays worldwide?
The focus had to change from unlimited GMV growth to more sustainable strategies of retaining customer loyalty.
Muted Expectations of the Double 11 Shopping Festival 2022
The last 2 years have been tough for ecommerce in China (remember that penetration is WAY higher than most other markets worldwide). Against the backdrop of continuing zero covid government policy and frequent regional lockdowns there are huge challenges for anyone looking to move goods around a country the size of China.
When you add onto that the cooling economic outlook combined with weakening consumer demand then it’s hardly surprising that the forecasts for this year’s Singles Day were not so optimistic. According to a survey carried out by Bain and Co (see graphic below) 34% of respondents said that they planned to spend less in 2022 than the previous year.
Remember that people who’ve been in lock-down don’t necessarily have the disposable income that they had in years past and the lock-downs also restrict the shipment and delivery of sales.
Singles Day is already an omnichannel event
As you can see from the diagramme above, the % of consumers looking to buy from 3 platforms or more increased hugely, meaning that whilst Alibaba with Tmall remains the biggest player in the double 11 online shopping festival, the market is in total more fragmented than ever.
This means that retailers and brands need to rethink their strategies as to HOW they can retain consumer loyalty, without simply going the route of ever deeper discounts.
Of course, prices play a role (after all, who doesn’t love a bargain) however aspects such as product quality (are they guaranteed genuine?) and aftersales service have become increasingly important.
In short, the market is maturing and evolving away from the total feeding frenzy of who can offer the biggest discount, in a race to the bottom where brands can only lose long term.
With ever more platforms (& offline stores) participating in the event, then retailers and brands need to carefully consider where to best focus their attention, energy, time and marketing budgets. The time is over when it was enough to just focus on Tmall because you knew that the majority of your consumers would be there.
Fast Sales in the First Checkout Period
102 brands exceeded a turnover of RMB 100 million (around €13.5 million) in the first hour of the initial check out period, and more than half of those brands were Chinese. For German brands, Aptamil was the number one seller with both Adidas and Siemens also breaking the RMB 100 mn barrier.
The GMV for home appliances grew by more than 40% yoy (year on year) with Apple, Lenovo, Midea, Haier & Xiaomi hitting a billion in the first minutes. Luxury brands were +113% compared to 2021 in the first 10 minutes.
JD Worldwide reported that in the first 10 minutes of official sales that 600 brands had more than 100% growth vs their previous year’s results, with the imported wine category growing by 568%.
During the 2nd check out period, the so-called “peak 28 hours”, JD experienced 200% growth in the first 10 minutes. This growth was especially driven by international brands. In fact JD’s overall growth during the retail holiday “surpassed the industry” to give them a record high result.
The best sold brands on Douyin were Apple, Estee Lauder, Proya and Tineco. According to Syntun, Douyin achieved a GMV of 181 billion, making them an increasingly important player (the popularity of their short video format helps with conversions).
Marketing spend was massively focused in the past on the 2 traditional channels of Alibaba/Tmall and JD (90%) whereas this year, the balance shifted to 70:30, with the 30% going to newcomers such as Douyin, but also Kuaishou or Bilibili.
Pinduoduo also grew faster than the competition, although generally community purchasing didn’t have great results.
If GMV records were not the main focus, what was?
When a market matures and a great deal becomes a given during a retail holiday, brands and consumers have to look elsewhere for differentiation factors and the double 11 shopping festival 2022 is no exception to that:
- customer loyalty
- new products and categories
- trends in how to reach consumers
These were all factors that were more in focus than in previous years, rather than purely the revenue figures.
CRM (Customer Relationship Management)
When everyone is offering great deals, how do you prevent your clients from seeing YOUR offering as generic? This is a challenge for both brands and retailers during such shopping holidays, and one of the answers is to focus on building customer loyalty.
Optimising user experience through membership programmes is a key part of this. Many brands & retailers focused on enhancing personalised service during the double 11 shopping festival as well as gaining new members. WeChat is often a key part of such programmes as it allows brands to sell directly to consumers (DTC) within the so-called private traffic space of a WeChat group.
The focus here may also be on product authenticity and after sales support.
Alibaba’s 88VIP programme
Ever since 2018, Alibaba has been growing their loyalty scheme. They now have over 25 million members who each purchase on average at least RMB 57000 each year. As well as certain personalised promotions, the programme offers 5% discount on selected products.
Of course categories such as mom & baby, consumer electronics and beauty products remain strong, however Singles Day is also a time to closely observe the rise of new categories and products, or to launch your own. How to get a larger share of the consumer mind?
This year the “pet” segment (everything from food to accessories and medicine) continued to grow strongly, as well as collectible toys, jewellery and outdoor sports.
With China’s covid policies meaning that international travel is effectively impossible (at least for touristic purposes), China’s youth have turned to niche sports (the Winter Olympics accelerated the growing winter sports industry) and outdoor experiences such as glamping. This represents a move away from pure consumerism, but obviously if you want to enjoy paddleboarding or weekends rock climbing then you need a certain amount of equipment.
Experimenting with Trends of How to Build the Brand and Reach Customers
China’s marketing space is unbelievably noisy, so in order to stand out it’s essential to keep evolving – never more so than this year’s Double 11.
Of course, live streaming remains an essential “must have” in the marketing mix & is likely to be that way also at least in the near future. However livestreaming alone isn’t enough. You need to consider what will be additionally important going forward and how to market in coming years more effectively to customers.
Virtual Influencers played an increasingly important role this year (they don’t get into scandals in the same way that a Viya or Austin Li can). According to a forecast by Forrester 20% of BTC brands will be working with virtual influencers by 2023.
Along with this kind of virtual reality influencer, brands and platforms have been experimenting with other VR and AI uses. Eg within the cosmetics or fashion industry it’s pretty standard to be able to see how a product or piece of clothing would look on you.
Digital collectibles were also a feature in this year’s shopping festival.
Increasing Rise of Offline Takeout Sales
Takeout shopping is a kind of online to offline method that has existed also in the past, but really took off during 2022. The consumer orders online and the delivery person selects, buys and delivers the product from a physical store.
With an average delivery time of just 30 minutes, the “instant gratification” factor was even higher than with purely online fulfillment, leading to higher customer satisfaction. (Whether your parcel was still hidden under the Everest sized mountain of deliveries in most compounds – you know, covid measures – is something I’ve yet to hear much about 🙊).
Meituan reported an increase of 500% in this kind of orders, with an average cart value of RMB 5800, and during the initial checkout 3 day period, Apple experienced 495% growth compared to last year.
The number of digital brands using brick and mortar retail doubled compared to 2021, as they realised the importance of takeout shopping. This method was especially popular with younger consumers and for products such as digital devices or beauty where the online promotion rules are often so complicated that consumers just want to save themselves the hassle (but still get the deal).
It’s hard to talk about environmental awareness and sustainability in such a celebration of consumerism, however behind the scenes Alibaba and other retailers have been placing more focus on green topics as in 2021.
That includes a focus on helping farmers (selling fresh produce), increasing the numbers of servers that run on green energy (can you imagine how much power is needed for this huge extravaganza??) and making more deliveries with autonomous electric vehicles.
I would say this is a step at least in the right direction, but just the beginning of the change needed.
The Double 11 Online Shopping Festival is Evolving
It would have been unrealistic to expect 35% growth rates to continue forever, and 2021 already proved that growth was slowing.
Consumer demands are changing, it’s no longer enough to simply offer deep discounts and brands are having to fight more for loyalty as the market is saturated. It is still possible though for brands to grow in categories which are perhaps losing ground if you find the right strategies and innovative methods eg in snacks or beauty. Consumers are becoming more focused on their health, hobbies and quality of life so offers and marketing have to reflect that and offer appropriate purchasing experiences.
So Singles Day is certainly not dead, but in order to be successful then it’s essential to move with the times and have a great plan about how to get the most out of this retail holiday. The sheer size of the event means you can’t afford NOT to be there, but it needs careful consideration to make sure that you can make the most of what it offers, without placing all your bets on the “ones”… A more sustainable attitude to consumption allows brands to have more stable strategies going forward.
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