Let’s turn the clock back two weeks to a night in Hangzhou, one of China’s fastest growing cities, and home of Alibaba.
When the clock struck midnight on 11 November, so began the world’s biggest shopping spree. Singles’ Day or, as its officially called, the Global Shopping Festival 11:11, is like combining the Olympics and the World Cup into one event for Chinese ecommerce giant Alibaba. A bit like Boxing Day sales, mixed with Black Friday plus a bit of Eurovision kitsch.
Singles’ Day started in the 1990s when young single people used it as an excuse to get together. Then in 1999 Alibaba co-opted it and turned it into a shopping event. Now it’s not just a single day, it’s a 20-day shopping festival, the biggest event in retail and ecommerce in the world and an orgy of consumption.
This year’s event smashed the previous year’s record by racking up sales of 268.4 billion yuan ($38.3 billion), just under a 26% rise from the figure posted last year. That’s a slower growth rate than the 27% seen on last year’s Singles Day.
The day got off to a strong start for new Alibaba CEO Daniel Zhang, who took over from the retiring Jack Ma earlier this year.
Sales hit $12.01 billion in the first hour. Within an hour and a half, Alibaba’s sales exceeded the total reached on Singles Day in 2016. Alibaba also set a world record for most payment transactions with Alipay, its online payment platform, processing 256,000 payment transactions per second. The number of delivery orders surpassed 1 billion. In just one day.
The sales figures dwarf the revenue for Amazon’s Prime Day sale – this year estimated to be $4bn (£3.1bn) across 17 countries. Alibaba’s Singles’ Day volume again outpaced US online sales on Black Friday and Cyber Monday combined.
This should not be a surprise given that Alibaba’s mobile monthly user figure is almost 700 million – almost the population of the USA and Europe combined. However, Alibaba is less of an ecommerce retailer than Amazon; its business includes a marketplace, a cloud business, a financial services business, food delivery apps, supermarkets and even film production.
The run-up to this year’s 11/11 had lots of “countdown events”, including an interactive, live-streamed four-hour fashion show broadcast across 10 Alibaba platforms.
Why is 11:11 such a success?
To understand Singles’ Day, you have to understand three things about Chin. Firstly, China went straight to mobile so the majority of the population is on mobile phones. In China, people now conduct their daily life without a wallet, cash or credit cards. There’s no need for that. All you need is your mobile phone, and you can use it for hiring a taxi, ordering food for lunch, booking travel, rating a restaurant, shopping, watching TV, paying your bills.
The second thing to know is the concept of city ‘Tiers’. There are Tier 1, Tier 2, Tier 3 and Tier 4 cities in China. Tier 1 cities are the likes of Beijing, Shanghai and Guangzhou – essentially sophisticated and affluent mega-cities. Tier 2 cities are places such as Chengdu or Dalian: still big cities with 16 million+ people, generally made up of provincial capitals but still fast growing and with consumer behaviour similar to Tier 1 trends.
Tier 3 and 4 cities might be found in mountainous areas and are usually home to up to 5 million people. There may not be the same infrastructure as elsewhere, but everyone has a mobile phone and you can reach people across the nation through the mobile network. Again, the scale thing: there are about 130 Tier 3 cities and 400 Tier 4 cities!
What is hard to understand is that such consumerism is part and parcel of the everyday experience in China as the country’s middle class grows exponentially.
The final thing to understand is the scale and influence Tencent and Alibaba have in China. The vast majority of web activity in the country happens through proprietary applications run by Tencent and Alibaba. The two dominate digital life in China and are an effective duopoly. Alibaba is known globally for it B2B ecommerce platform, Alibaba.com, as well as the Tmall and Taobao brands (think eBay, Paypal and Amazon combined, with TMall for consumers, and Taobao for consumer to consumer).
Alibaba’s rival Tencent owns WeChat, which has 1 billion+ users, as well as its older messaging app QQ. WeChat is like Facebook, Twitter, Spotify, WhatsApp, Paypal and YouTube, as well as gaming and reading, coming together in one ‘superapp’. Both platforms are a way of life; WeChat was recently called the ‘operating system of China’.
For marketers, these internet giants increasingly control the interfaces to consumers across multiple touchpoints. And they own the data that comes as a result of those interactions. The proposition to marketers who wish to access customers in China is dead simple: deal with us directly if you want to reach your audience; make it on mobile and you can deal with the whole country.
Who is taking part in 11:11?
Almost half (46%) of Singles’ Day consumers were born in the 1990s, not surprising given that 28% per cent of China’s 800 million online population are aged between 20 and 29. What is hard to understand is that such consumerism is part and parcel of the everyday experience in China as the country’s middle class grows exponentially.
These consumers are also less concerned about privacy: data from Alipay shows that during this year’s online shopping spree, 60% of total payments were done by users scanning their fingerprints and faces.
For brands, Singles’ Day provides a platform for new product launches. 11:11 has such significance that brands start planning nine months out, with some integrating the event into three-year strategic plans.
More than 180,000 brands took part in the Singles’ Day event, with more than 40% of consumers making purchases from international brands. Japan, the US, South Korea, Australia and Germany are the top five countries selling to China while more than 60,000 international brands including Adidas, Bose, La Mer, L’Oréal, Mac, Mattel, Mondelez, Nike, P&G, Shiseido, Siemens, Unilever, Uniqlo, Wyeth and Zara took part.
What can we learn from 11:11?
1. Creating a new retail experience
The 11:11 Global Shopping Festival provides insights for the rest of retail in how to build excitement and engagement with today’s consumers. Alibaba sees normal high street retail as dull and Singles’ Day is part of a shift by Alibaba from transactional selling to experiential shopping.
Consumers don’t just watch and buy, they take part via Alibaba’s Taobao or the Tmall app on their phone. Audience and viewers are asked to vote, and shake their phones to earn credits and reveal deals. The blend of retail and entertainment, innovation and raw commercial options is quite different to anything in the west.
2. The blurring of online and offline
Jack Ma, the founder of Alibaba, coined the phrase “new retail“ to depict the increasingly blurring boundaries between the online and offline shopping world. The company put this into action with the purchase of the Hema supermarket chain (now called Freshippo) and is now rapidly expanding it.
Alibaba set up 60 new retail-powered pop-up stores across 12 cities and 52 shopping malls in China to trial an augmented reality lipstick. And 100,00 stores in 334 cities were converted into “smart stores” to bring a range of new retail experiences such as facial recognition payment.
3. Integrating services seamlessly
Alibaba has made Singles’ Day total integrated. It uses Tmall, Taobao, services platform Ele.me, Rural Taobao (for rural areas), Ling Shou Tong – the Alibaba platform for convenience stores in China – all hosted in AliCloud and using the Cainiao Logistics network.
4. Big data insights
Alibaba supplies data and insights to brands to help create new products and packaging expressly for Singles’ Day and get access to the data from their sales to be mined for the other 11 months of the year. As an added bonus, Alibaba uses real-time data visualisation in the media centre at the Singles Day Gala Event to show sales results.
Whilst Amazon, and most other retailers, will bombard you with discounts – for the consumer 20% or 30%, 60% or 70% – does it really make a psychological difference? (although it does to the bottom line for the retailer), Alibaba plays a different engagement game. Gamification is key, and viral. There are interactive treasure hunts and augmented reality games. Play a game to find a black cat (Alibaba’s logo for 11:11), or even better a red envelope, and you unlock discounts. Hard earned discounts which you are much more likely to redeem.
Beyond the hype
Of course, you could ask, do we really need such a frenzied festival of consumerism, in a world increasingly fragile with environmental stresses and inequality. Probably not. From a business perspective, the Chinese market is booming particularly in the young middle classes, and the Chinese businesses who serve them are leaping ahead in techniques for engaging consumers and growing business. However at the same time, we need to ensure that brands and consumer appetites are embraced as a positive force, to achieve personal progress and for a better world.