In Telligence

Decrypting Singles’ Day 2020

11.11

Another record year. Alibaba’s “Singles’ Day” or “Double 11” sales event, the most important commercial event in the Chinese calendar, 11th November, achieved USD 74+ billion in Gross Merchandising Volume, according to official data from the Chinese Ministry of Commerce.

SEE ALSO : Alibaba 2020 11.11 Global Shopping Festival generated US$74.1 billion in GMV

Equivalent to a 26% year-on-year growth, the performance was the highest leap of the past three years. While brands will be encouraged by this continued growth as they prepare for next-year’s event, we look at three aspects that will have strong implications in determining just how much they may share in that success in 2021.

Tmall
Source: Shutterstock

Warm-up and presale: more time to promote and prepare

One of the obvious contributors to this year’s headline figures was an increase in promotion activities in the Double 11 “warm-up” period, held each year from 1st-10th November. Traditionally smaller in scale, this year the warm-up saw bolder promotions across a range of product categories, surely planned in a bid to capture rebounding consumer spending following the pandemic dip.

While more than 65% of consumers purchased items both during the warm-up and on the day itself, the two waves of promotion created confusion for many, with no clear announcements on which products or categories would enjoy the best prices across each period.

Another established mechanism that was ramped us this year was the pre-sale model, allowing consumers to pay a 10% deposit before 11th November in order to secure a high discount and complete the purchase on the day itself. This proved a useful tactic for promotion, but an even more useful way for stores and brands to manage their stock efficiently and guarantee speedy deliveries.

Livestream
Source: Shutterstock

Livestreams as key revenue drivers

Over the past few years, livestream has played an increasingly crucial role during Double 11. This year the engagement format affirmed its role not just as a promotion channel, but as a key revenue generator, as testified by its four-fold year-on-year growth in GMV.

Yet it is not without its challenges.

Return rates for products sold through livestream remain a serious one for brands, some of which have reportedly experienced as high as 50% returns on their sales. This may be attributed to the impulse nature of live-stream purchases, as well as potential fraudulent practices to ramp-up sales figures – allegedly the case for live-streaming platform YY Live according to a report by US investment firm Muddy Waters earlier this month.

Livestream is also particularly prone to the Matthew Effect, with few live streamers accounting for the majority of the success figures. In 2020, the top two live streamers Li Jiaqi and Weiya perfected the art of selling to audiences of price-conscious viewers to account for over 50% of livestream GMV. But for premium and luxury brands looking to maintain an image of refinement while pushing sales, finding the right live streamer for collaboration is easier said than done.

Perfect-Diary
Source: Perfect Diary

New Chinese brands bring serious competition

Among 357 subcategories of merchants, new Chinese brands (founded over the past four years) were more visible than ever during Double 11. These brands have succeeded in great part thanks to their and ability to (1) find a niche pain point (2) develop a product around it (3) market heavily across different platforms. An often-quoted example is Perfect Diary, the Chinese cosmetic brand that boomed over the past two years by building a reputation as a reliable makeup brand with affordable pricing. And far from relying on product and logistics alone, the brand reinvests over 65% of their revenue into marketing.

A pinch of salt

Established in 2009, Singles’ Day seems to be unstoppable with annual record growth figures. Part of its ongoing success comes not only from increasingly avid consumers, but from a strategy of diversification. Over the past few years, the shopping festival has expanded its product categories from household goods, fashion and beauty to cars and real estate, and even combined sales figures with those of its offline supermarkets Hema and food-ordering platform Eleme.

SEE ALSO : How did the first window of Alibaba’s 2020 11.11 Global Shopping Festival go?

More than a shopping festival, to Alibaba Singles’ Day represents a key opportunity to showcase its full strength to its investors and the stock market. It is up to brands, therefore, to be cautious and dive deeper into the figures to understand the real opportunity – and challenges – for them on Singles’ Day 2021.

About the author 

Chen Liang is the Director of strategic communications consultancy CDGL. Based across London, Hong Kong and Shanghai, the firm specialises in helping premium lifestyle and luxury brands engage Chinese consumers around the world.

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