2) Thegamificationofshopping,omni-channelsolutionsandglobalizationareexpectedtobethekeyhighlightsforthisyear’s Singles’ Day sales, according to the media. Weawaitofficialannouncements fromAlibabaon thisyear’sSingles’Daymarketingstrategy.
3) Other e-commerce platforms in China have plans tocompete against Alibaba through promotions, improvedfulfilment capabilities and collaboration with industrypartners.
D E B O R A H W E I N S W I G M a n a g i n g D i r e c t o r ,
F u n g G l o b a l R e t a i l & T e c h n o l o g y d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m
U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9
INTRODUCING SINGLES’ DAY: CHINA’S LARGEST ONLINESHOPPINGDAYSingles’Day (November11) is themost influential annualonline shoppingday inChina,andbrandedbyAlibabaastheGlobalShoppingFestival. It isconsidered a chance to boost sales after China’s GoldenWeek holiday inOctober.
HISTORYOFSINGLES’DAYSingles’ Day (November 11) was first started among students at NanjingUniversity inthe1990sasadayformentocelebratetheirbachelorhoodor“singleness”. The date was chosen because the number “1” resembles anindividual that is alone. Alibaba rebranded it as a day for singles to treatthemselveswellbybuyingthethingstheydesire,andmarketeditsfirstonlinesales in 2009 with special “Double 11” deals to attract customers.Subsequently,AlibabaeventrademarkedseveraltermsrelatedtoSingles’Dayin 2012. The online sales extravaganza caught on with other e-commerceplayersinChina,withJDlaunchingitsfirstSingles’Daysalesin2010.
OURPROJECTIONFORSINGLES’DAY2016At FungGlobal Retail& Technology,we expect Singles’Day 2016 sales toreach US$20 billion, which represents a 40% year-over-year increase.Weexpectsalesmadeonmobiledevicestoincreasesequentiallyonthisyear’sSingles’Day,from71%in2015and43%in2014.
• ImprovedfulfilmentcapabilitiesthroughAlibaba’ssuiteofsolutions:Alibaba has increased the efficiency of its payments, supply chain,omni-channel, online payment and logistics infrastructure ahead ofthisyear’sSingles’Day
HIGHLIGHTSTOLOOKOUTFORONSINGLES’DAY2016Singles’Dayhasevolvedfromaone-dayoccasionforChinesecustomerstoshop for deals to aworldwide shopping festival.Weoutline the followingplansAlibabahasforSingles’Day2016inordertomeetitssalesobjectives,as reported in themedia.Official announcements for Alibaba’smarketingstrategyarescheduledforOctober20.
1)TheGamificationofShopping
One of Alibaba’s strategies for Singles’ Day is tomerge gamificationwithonline shopping. The company will leverage its media and entertainmentassetstodriveincreasedonlineconsumption.
2016AlibabaSinglesDayCountdownGalawillbeheldontheeveofSingles’Day. The countdown to the event will be held in Shenzhen and will bebroadcast live by Zhejiang Satellite TV, its official media partner, andAlibaba’smediaassets, includingYoukuTudou,TmallTVBoxandUCWeb.Alibaba has hired US television producer David Hill, the producer of theSuperBowl,theOscar’sceremonyandAmericanIdol,accordingtoBarron’s.
2016 Tmall Singles Day Global Fashion Show features the latest fashiontrends and will be broadcast on multiple channels before Singles’ Day.Approximately50ofthe80brandsfeaturedintheeight-hourfashionshoware expected to be global brand, and the production teamof the fashionshowwasselectedfromseveralcountries.ViewerswillbeabletoorderanyclothingshownduringthefashionshowonTmallinrealtime.InternationalbrandsthatwillparticipateintheshowincludeBurberry,Maserati,GuerlainandRimowa.
AlibabawillpromoteproductsonTVscreensthatwillallowviewerstoscanQR codes and purchase the items on-screen. Thiswill allow customers toenjoyaninteractivemulti-screenexperienceovermobile,onlineandonTV,andtowatch,playandpurchaseinrealtime.
Figure3.Alibabacommerceandmediaassets
Source:Companydata
3.Omni-channel
Alibaba will integrate the online and offline channels, and increase theefficacy of its payments and logistics infrastructure, which is intended tostimulateconsumptiondemand.
Alibaba’s corporategoal is for its ecosystemand infrastructure to supportbothChineseandglobalcompanies.Thefivekey infrastructure inplacetohelplocalcustomersandSMEsexpandabroadaremarketplace,payments,logistics,cloudcomputingandbigdata.
CainiaoNetwork,Alibaba’s logisticsarm,expectsenhancedexpressservicelevels this year, with the support of big data and increased capitaldeployment.
4.Globalization
Overseasorderingactivitywasoneof theprimary reasonsdrivingsales tooutperform on last year’s Singles Day, and Alibaba expects the growthmomentumtobesustainedthisyear.
Participationofglobalbrandsinthesaleseventwilllikelyincrease,asTmallhas expanded its source of procurement from domestic to overseassuppliers. InternationalbrandssuchasAveeno,CorinedeFarme,Guerlain,utenaandNutrilonmade theirdebutonTmallGlobal in September2016.Moreover,TmallGlobal,throughitspartnershipwithTarget,hasintroduced
brands including California Baby, Lansinoh, Munchkin, Up&Up, ArcherFarms,AmedaandStarbucks.
JackMa, theChairmanofAlibaba, reiterated ina letter toshareholders inOctober2016,thatglobalizationisoneofthekeytenetsofthegroup’slong-termcorporatestrategy.
Figure4.TmalladvertisementforSingles’Day
Source:Companydata
RESPONSEFROMOTHERE-COMMERCEPLAYERSJD.com announced that it will set aside RMB500 million for logisticssubsidies to facilitateefficientdeliveryof itsmerchandise forSingles’Day.JDhasyettoannouncewhetheritwillcontinuebroadcastingitsSingles’DayGalashowthisyear.
Suning,20%ownedbyAlibaba,announceditscooperationwithZJSExpress,a domestic courier company for Singles’ Day delivery. Suning is set toannounceitsSingles’DaymarketingstrategyonOctober18.
NetEase, through its cross-border ecommerce platform Kaola.com, hasannounced partnerships with international brands such as UGG andBellamy’s Organic (both from Australia). Kaola.com also signed acooperationagreementwithSaSa,whichenricheditsproductportfoliowithinternational cosmetics brands such as Lancome, SK-II, Sisley, Dior, Gucci,ChanelandShiseido.
Yihaodian, an online supermarket that JD acquired fromWalmart in June2016,haschallengedAlibaba’sTmallsupermarkettoapricewarintherun-uptoSingles’Day.Yihaodianannouncedthat itwill investRMB1billiontoofferlowerpricestoshoppersonitsplatformthanonTmallsupermarket,inresponse toAlibaba’sannouncement in JulyofdiscountsofferedonTmallsupermarket.
In2015,grossmerchandisevolume(GMV)forAlibaba’Singles’DayreachedRMB91.2billion(US$14.3billion),representingayear-over-yearincreaseof54%, and comprised 2.9% of Alibaba’s total sales for FY16 ended March2016.ThestronggrowthinGMVwasachievedprimarilybythesalesboostfromoverseasproductsandanomni-channelstrategy.
AGLOBALPERSPECTIVEON2015SINGLES’DAYOnSingles’DayinternationalretailerstargetChineseshoppers,andChineseretailers target international shoppers. Alibaba saw buyers and sellerscomingfrom232countriesandregionsduringSingles’Day2015.AccordingtoofficialstatisticsforSingles’Day2015:
• For every 12 Chinese people, there is one buying from Tmall onSingles’Day.
• Forevery10peopleoutsideofChina, there isonepersonbrowsingontheAliExpresswebsite.
OnTmallGlobal,anonlinemarketplaceforimportedproducts,therewasacountry-specific section that includedproducts fromcountries suchas theUS, the UK and Japan. The products, with a heavy emphasis on beauty,health and personal care, were listed on a separate country page.International retailers such as Macy’s, Costco and Sainsbury’s werepromotedontheTmallGlobalsite.
According to official statistics, over 5,000 international brands from 25countriesparticipatedintheSingles’DaysaleonTmallGlobalin2015,andover30millionChineseconsumersboughtimportedproducts.
• The most popular categories of imports included maternity andchildcare(30%ofsales)andcosmetics(22%ofsales).
• The most popular import countries for Chinese online shoppersincludetheUS,Japan,Korea,GermanyandAustralia.
• CostcowastheNo.1retailerofimportedproductsonTmallGlobalin2015 by value, with sales reaching 50 million units. Costco firstenteredtheChinamarketthroughTmallGlobalin2014.
AliExpress, Alibaba’s international platform for overseas shoppers, allowsshoppers from around theworld to join the Singles’ Day shopping event.AliExpresswas launched in2010 tohelpmarketandsellChineseproductsoverseas.OnAliExpress,pre-dominantlyChineseproductswereshowcased,includingtabletsfromXiaomiandsportswearfromLi-Ning.
The site allows shoppers to buy products directly from China, and offersdiscounts on the sale day. AliExpress handled 21.24 million orders fromoverseasbuyerssoldby62,800ChineseretailersforSingles’Dayin2015.
Other e-commerce platforms in China actively competed with Alibaba onSingles’ Day in 2015 through promotions and collaboration with industrypartners.
JD, Alibaba’s closest competitor, formed a strategic alliancewith Tencentwhich enabled WeChat users to shop directly on JD.com via the app’sshoppingchannel.JD.comsawatotalof30millionordersonthesingledayofNovember11,whichrepresenteda114%year-over-yearuptick,breakingits2014recordof14millionordersinonly12hours.
Suning, partlyownedbyAlibaba, launchedaOneDollar Sale campaign toattract customers. On the day, Chinese online shoppers ordered 37,000health products from the US within 11 hours of the start of Singles Day,220,000 Xiaomi smartphones and around 380,000mobile power chargerswithinthefirst18hours.
WHATWASDONEOUTSIDEOFCHINAFORSINGLES’DAY2015InternationalretailerslaunchingtheirownSingles’Daycampaignremainedintheminority.ThefewinternationalonlineretailerssuchasNeweggwholaunched their own campaigns offered discounts on their products.According to paid search statistics by AdGooroo, a search marketingintelligence company, the total spend by US retailers on Singles’ Dayadvertisingkeywordswas“insignificant”.
• Newegg, an online retailer, selected 150 deals for the 24-hourSingles’Daycelebration,offering11%offordersforthoseusingVisaCheckout.
WeestimateAlibaba’sSingles’Daysalesin2016willincrease40%yearoveryear to reachUS$20billion.Ourgrowthexpectation isprimarilydrivenbyextensivepromotionalcampaignsandmarketingactivities,increasingglobalreach and improved fulfilment capabilities by Alibaba’s suite ofinfrastructure solutions. The gamification of shopping, omni-channelsolutions and globalization are expected to be the key highlights for thisyear’s Singles’ Day sales, as reported by the media. We await officialannouncementsfromAlibabaonthisyear’sSingles’Daymarketingstrategy.
