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2015 Singles’ Day - Key themes and implications November 2015 Asia Distribution and Retail Fung Business Intelligence Centre China E-Commerce
2015 Singles’ Day - Key themes and implications
November 2015
Asia Distribution and Retail
Fung Business Intelligence Centre
China E-Commerce
About the Singles’ Day
Singles’ Day, the world’s largest online shopping festival, will be kicked off next week on 11 November for the 7th year.
The festival was created by Alibaba in 2009. Since then, the online festival has been very successful in generating sales for Alibaba, and became a national and even global event for most online and offline retailers.
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In the past Singles’ Day, Alibaba invited Tmall Global* and AliExpress** merchants to participate in the promotions. Consumers from over 220 countries could purchase promotional products via AliExpress, while Chinese consumers could buy promotional items from overseas countries directly via Tmall Global.
Meanwhile, the Singles’ Day event has brought to the forefront unconventional categories such as travel products, financial products, and education services.
* Tmall Global: Cross-border B2C e-commerce platform of Alibaba ** AliExpress: Global retail marketplace made up of mostly small Chinese businesses, offering products to international online buyers at factory prices in small quantity
About the Singles’ Day (Cont’d)
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0.052 1.9 5.2
19.1
35.0
57.1
2009 2010 2011 2012 2013 2014
GMV of Tmall and Taobao on Singles’ Day
2009 – 2014, billion yuan
Source: Alibaba
In recent years, the promotion of Singles’ Day has been extended, from just one day on 11 November, to a week or even a month. Volume from pre-orders accounts for a large part of the GMV on Singles’ Day.
Last year, Alibaba Group generated 57.1 billion in gross merchandise volume (GMV) on the Singles' Day. The GMV reached 10 billion yuan in the first 38 minutes of the day. Late-night “before bedtime” buying was significant.
We expect the Singles’ Day will set another record this year, but likely at lower growth rate.
Six key themes for 2015 Singles’ Day
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Globalization 1
Increasingly mobile 2
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O2O 4
On-going price war 5
Fresh produce 6
Strategic partnerships
1. Globalization
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Alibaba has relocated the base for this year’s Singles Day shopping festival from Hangzhou to Beijing to showcase the event to the world.
Theme for this year is “Buy from the world, sell to the world” (“買全球、賣全球”)
One of Alibaba’s focuses is on those highly sought-after product categories such as baby and maternity, cosmetics, fresh food, apparel, duty free shop products from 11 countries including the US, Korea, Japan, Thailand, England, Australia, New Zealand, France and Germany .
Tmall offers free shipping (tax included) for selected cross-border products under promotion.
Globalization is the main theme for the Singles’ Day this year. Riding the waves of the rapid development of cross-border import e-commerce, many foreign retailers have started selling to Chinese consumers via registered e-commerce platforms such as Tmall Global, JD Worldwide, Suning Worldwide, Amazon Overseas, Jumei Global, etc. Many have stocked up products in bonded warehouses to deal with the surge in order volume during the Singles’ Day promotion period. 2013 2014
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Top 10 countries of which consumer spent the most during Singles’ Day
Source: Alibaba
1. Globalization (Cont’d)
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JD Worldwide offers overseas products of over 3,000 brands. It has established Germany Mall, France Mall, Korean Mall, the U.S. Mall, etc. to sell products from respective countries to Chinese consumers.
JD Worldwide has established bonded warehouses in Hangzhou, Ningbo, Guangzhou customs to provide fast delivery to consumers.
Suning Global has established the U.S. Mall, Japan Mall, Hong Kong Mall, Europe Mall, Korean Mall, etc. to offer overseas products to Chinese consumers.
Products in the bonded warehouses can be delivered to consumers on the next day.
2. Increasingly mobile
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Various discounts and lots drawing are offered via the Gome app from 28 October to 12 November.
Mobile commerce is becoming more prevalent in China. A key area that impacts the success of Singles’ Day this year is the GMV from mobile. The surge in mobile GMV was significant in 2014. All three leading e-commerce platforms saw mobile contributing over a third of their total GMV. We expect even a larger share of sales coming from mobile this year.
42.6%
40.0%
38.9%
Share of mobile GMV during Singles’ Day, 2014
Source: Company websites
Special discounts on selected items are offered to consumers purchasing via the JD.com’s app on the Singles’ Day.
3. Strategic partnerships
Some Internet giants are forming strategic partnerships with leading retail players to capitalize on the upcoming Singles’ Day. They are cooperating in areas such as mobile payment, social media, big data analysis, technologies and logistics.
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19 OCT JD.com and Tencent jointly announced an expanded partnership to provide merchants with innovative mobile marketing solutions ahead of this year's Singles Day promotion.
JD.com has leveraged WeChat’s friend circles and launched a campaign during 1-10 November to offer discount coupons and mobile red packets.
10 AUG Alibaba and Suning Commerce jointly announced the strategic tie-up. Alibaba will invest 28.3 billion yuan for a 19.99% stake in Suning and Suning will invest up to 14 billion yuan for a 1.1% stake in Alibaba.
18 OCT Suning announced a price war with JD.com.
“京腾计划”
“平京战役”
4. O2O
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Discounted coupon offerings:
Through location-based services (LBS), consumers will receive text notification on Singles’ Day promotion from retailers via the Taobao app when they enter any of the 180,000 participating stores in 330 cities.
Consumers can pre-order via the Taobao app and collect the orders in-store.
Consumers can also scan the barcode displayed in-store and get a chance to win discount e-coupons.
The Singles' Day is no longer just about selling products online. To stand out from competitors, many retailers have launched mobile and social media strategies as well as develop O2O initiatives to enhance consumer experience. As mentioned, a common way to do this is to partner with leading Internet players. The Singles' Day provides a good opportunity for retailers to showcase their O2O capabilities and gauge customer receptiveness to the initiatives in a short period of time.
180,000 physical stores
4. O2O (Cont’d)
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Experience zones:
Suning, Intime and Haier, along with other retail brands, will set up special experience zones in their stores. Consumers can try out displayed products and purchase the same product offerings on Tmall and offline with same discounted prices.
After-sales services:
Tmall Service Station will be set up in more than 1,600 Suning stores across China to provide maintenance and after-sales services to consumers.
“Old-for-new” (trade in) subsidies for home appliances:
Tmall provides subsidies to consumers when they return old home appliances to Suning. Suning will collect the home appliances door-to-door. Subsidies will be in the form of electronic red packets for any purchases on 3c.tmall.com.
4. O2O (Cont’d)
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Tmall Global opens store in Intime’s physical store during the Singles’ Day promotion period:
Tmall Global has opeed a store in the brick-and-mortar store of Choice, a cross-border e-commerce platform developed by Intime Department Store, offering maternal and children’s products, cosmetics and other product categories. Users can place orders in the store and the sellers will deliver the products from bonded warehouses to the users.
5. On-going price war
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Suning has partnered with Alibaba to fight against JD.com on price. According to the management of Suning, the company targets to price its most popular items 20% lower than that in JD.com. General retail price for the same SKU will also be lower than in JD.com.
Through LBS, Suning offers electronic red packets when consumers are near the offline stores. The amount of red packets will be greater when consumers are nearer to the store.
Besides, electronic red packets will be sent to consumers through various mobile campaigns.
The total amount of electronic red packets reaches 2 billion yuan during the Singles’ Day promotion period.
The price war occurred during the Single's Day promotion period is perhaps the most fierce one among the year. Retailers are offering heavy discounts, cash coupons, and rewards to consumers.
5. On-going price war (Cont’d)
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Tmall has launched a promotion activity involving tens of thousands of brick-and-mortar stores. From 1 November, Tmall will give out 100 million electronic red packets to consumers with values varying from 1 yuan to 1,111 yuan, and e-coupons worth 3 billion yuan.
The total value of discounted coupons distributed during the Singles’ Day is estimated to reach 4.8 billion yuan.
5. On-going price war (Cont’d)
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JD.com has also started offering discounts to customers. Discount coupons are available for one month from 19 October to 20 November.
Special discounts on different categories are offered for 11 days from 1 to 11 November.
5. On-going price war (Cont’d)
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Gome has also participated in the price war. If consumers find out that the price of the same SKU of product is more expensive than in JD.com and Suning, consumers can get 100 yuan reward.
If consumers paid more for the same products in Gome than in JD.com and Suning, consumers can get 300 yuan refund.
Discounts and coupons have been offered starting from 28 October.
6. Fresh produce
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JD Supermarket offers discounts of 110 yuan for purchases over 199 yuan.
Fresh produce is another major focus in this year’s Singles’ Day. B2C platforms such as Tmall, Womai, Amazon China, Suning, Better Life, SF Best, are all promoting intensively for the Singles’ Day.
6. Fresh produce (Cont’d)
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Alibaba is working with over 100 industry associations around the world to bring their fresh produce into China, including German Agricultural Society, National Fisheries Institute Incorporation from the United States, Chilean Fruit Exporters Association, etc.
Fresh produce can be delivered to 246 cities within 24 hours.
Tmall Supermarket offers discounts of 100 yuan for purchases over 188 yuan, and 100 yuan cash coupon will be given. Discounts are given to pre-sale goods in Tmall Supermarket as well.
Jack Ma placed the first order during the launch event, spending 38,888 yuan on a 46-kilogram bluefin tuna imported from Japan when going through an array of fresh produce from around the world displayed at the launch.
Marketing for the Singles’ Day
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Alibaba will host its inaugural countdown gala celebration for the Singles’ Day Festival at the Water Cube (National Aquatics Center) in Beijing in the evening of 10 November. The gala celebration will be directed by famous Chinese film director Feng Xiao Gang, featuring celebrities and performances that will be broadcast live internationally, with limited tickets available to the public.
Consumers will be able to use the 'shaking function' of the Taobao and Tmall App to get surprise rewards such as overseas trips and smart home appliances for only 1 yuan.
Alibaba will collaborate with Hunan Satellite TV station on a live broadcast, pushing the Singles’ Day fever to a broader Chinese audience overseas.
10 NOV
Nowadays, promotions for the Singles’ Day are not confined to online campaigns. For example, Alibaba will host a countdown gala to celebrate offline too.
Logistics for the Singles’ Day
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Alibaba’s logistics arm, Cainiao estimated that it will deploy more than 1.7 million delivery personnel, 400,000 vehicles, 5,000 warehouses and 200 aircraft to support Singles’ Day.
JD.com leverages its self-operated logistics system. It operates 166 warehouses in 44 cities and a total of 4,142 delivery stations and pickup stations. Its delivery network covers 2,043 counties and districts as of June 2015. All stations are well-prepared for the challenge during the Singles’ Day.
According to the State Post Bureau, more than 760 million parcels are expected to be delivered during the Singles’ Day sales promotion week (11 to 16 November) this year. As many as 140-plus million parcels will be delivered on a single day. For the whole year, 20 billion parcels will have been delivered. From 1 November onwards, real name registrations and valid identity documents are required for all parcel senders and receivers. Logistics companies and e-tailers are improving their logistics efficiencies to cope with the high volume of express deliveries. Most of them are offering next day delivery for major cities.
Logistics for the Singles’ Day (Cont’d)
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SF Express has increased the number of all-cargo aircraft to 22 and provided dedicated circulation services for individual e-commerce clients.
TTK Express has added new site area of 35,000 sqm. It has also invested 70 million yuan in upgrading the information system.
YT Express has rolled next-day delivery services for Jiangsu, Zhejiang and Shanghai.1 yuan will be refunded to consumers if there is delay.
Suning has rolled out reverse logistics services. 2-hour delivery service will be available in 195 cities.
Deppon logistics participates in the Singles’ Day promotion for the first time. It provides delivery services of large items for e-commerce sellers and buyers, improving delivery services and shortening the transit time of large items through standardized services.
Deppon Logistics
ZTO Express has added 4,000 vehicles and 16,000 workers; new allocating centers in Jinhua, Hefei, Dongguan, Zhengzhou and Nanjing will start operation before the Singles' Day.
Conclusions and implications
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Facing a weak retail environment, heavy promotions and price wars seem to be unavoidable this year. Retailers are using this opportunity to get rid of the excessive inventories, and increase sales volume in a short period of time. However, in the long term, many retailers may lose significant profit through margin erosion.
Retailers should put more emphasis on enhancing customer loyalty. Providing unique and better quality products, better services online and offline, higher logistics efficiency, are some major ways to stand out from the crowd.
Since mobile will remain a key focus, we expect an even larger proportion of sales coming from mobile. To make the most of the Singles’ Day, retailers should harness the power of mobile and O2O to provide better consumer experiences. Forming strategic partnerships with leading Internet players has proved to be invaluable in the “Internet-plus” era.
As China’s leading e-commerce players are all launching globalization strategies for the upcoming Singles’ Day, both local and foreign retailers should leverage these cross-border e-commerce platforms to increase brand awareness, tap new market and extend customer reach.
CONTACTS
Asia Distribution and Retail
Teresa Lam
Vice President
(852) 2300 2466
Christy Li
Research Manager
(852) 2300 2476
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Email: [email protected] http://www.fbicgroup.com/
Pictures, logos sources from company official websites, weibo, and other Internet resources.
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© Copyright 2015 Fung Business Intelligence Centre. All rights reserved.
Though the Fung Business Intelligence Centre endeavours to have information presented in this document as accurate and updated as possible, it accepts no responsibility for any error, omission or misrepresentation. Fung Business Intelligence Centre and/or its associates accept no responsibility for any direct, indirect or consequential loss that may arise from the use of information contained in this document.
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