POV: 11.11 Preview

Background:

Alibaba’s shopping festival - 11.11 or Single’s Day – is set to break records again in its 11^th year and even Taylor Swift is getting in on the fun as the opening act at this year’s 11.11 Countdown Gala.

Details and Implications:

Starting out with just 27 merchants in 2009, 11.11 has grown to over 200,000 brands, one million new products and an estimated 500 million shoppers on Alibaba’s Tmall. Predictions suggest 100 million new shoppers this year looking to take advantage of the $7.15 billion USD (50 billion RMB) in promotional and coupon savings. Last year, the event was responsible for selling $30.8 billion USD in gross merchandise volume, far surpassing online revenues from Black Friday, Thanksgiving, Boxing Day and Cyber Monday combined. 

Pre-sales dominate on a more immersive Tmall 2.0: Thousands of merchants have upgraded to Tmall 2.0 - previously only available for mass brands - allowing customisation of stores using a suite of new tools and features to engage with customers through rich, personalised content and promotions, as well as an omnichannel experience. Tmall 2.0 has enabled brands to drive pre-sales, with Lancôme, L’Oréal Paris, Shiseido, Helena Rubinstein, OLAY, Estee Lauder and The History of Whoo all surpassing $14 million in sales within the first ten minutes of pre-sales. Memberships on Tmall have become increasingly important this year, offering brands the chance to turn ‘public traffic’ into ‘private traffic’ and more cost-efficiently re-target and retain customers.

KOLs (Key Opinion Leaders) Shift Consumer Focus: On the first day of pre-sales sales by livestreaming grew 15 times. Shifting consumer focus from “What do I want to buy?” to “What should I be buying?”, KOLs are responsible for this exponential rise. With Chinese consumers placing greater emphasis on trusted peer reviews, KOL’s word-of-mouth effect in China has shown to be twice as strong as that of paid ads - a 37% higher retention rate than without KOLs. One of this year’s greatest pre-sales success stories belongs to Li Jiaqi, known fondly in China as the Lipstick King. On the first day of this year’s presales, he attracted over 31 million viewers during his livestream, selling a record-breaking 100 million RMB worth of products within six minutes.

Yet KOCs (Key Opinion Consumers) Have the Final Say: First emerging in 2019, KOCs are the latest wave of influencers to dominate China’s eCommerce world. As many celebrity influencers have fallen out of favor with Chinese netizens who are all too aware of their lucrative brand deals, they have instead started placing greater trust in key consumers who have made a trustworthy and reliable name for themselves reviewing products. Most recently, Perfect Diary centered its entire marketing plan around KOCs, becoming one of China’s most talked about beauty brands in 2019.

She-economy and Lower-Tier Consumers Drive the Buying Frenzy: China’s economy has slowed recently due to global and domestic headwinds but the ‘She-economy’ is growing. 55% of China’s eCommerce sales last year were made by female shoppers and Chinese Advocacy Marketing Platform, PJdaren, says 99% of females plan to shop during this year’s festival, with 40% planning to spend more than 3,000 RMB ($430 USD). Females in lower-tier cities have a higher propensity to spend, with 77% expecting to spend more than 1,000 RMB, compared with 70% in tier 1 and tier 2 cities. For the first time this year, Alibaba held a concurrent kick-off event in China’s north-eastern city of Harbin, with lower-tier cities contributing 70% of Alibaba’s new annual active customers.

Overseas Brands Take Center-Stage: Of the 200,000 brands participating this 11.11, an estimated 22,000 are international brands, representing 300% YOY growth. Earlier in September, Rhianna’s Fenty Beauty became the first LVMH beauty brand to enter China via Tmall International. Due to Alibaba’s acquisition of NetEase Koala – a leading cross-border e-Commerce platform - overseas brands will continue to accelerate their presence. 

Summary:

11.11 remains the biggest sale on earth. Next week we‘ll bring you the round-up of who sold what.

Further Reading: Tmall | Caixin Global | Asia Times | Business Times | Bloomberg