China’s Single’s Day bonanza: Going beyond numbers to trends driving 2015
The headlines numbers for this year’s Single’s Day (11 November) sales in China are, again, very impressive. More than CNY 57.11 billion (up 60 per cent y/y) or USD 9.3 billion was spent on Alibaba platforms alone. That’s nearly double the combined online sales of Black Friday and Cyber Monday in the US. This is further gilds China’s throne as the worlds largest eCommerce market. The king who sits on top of this throne? Alibaba’s Jack Ma.
But instead of kneeling before King Jack, or feigning surprise at big China numbers (Yes, China, Wow!) lets identify the key trends of this year’s Single’s Day sales to find out how brand’s can benefit from ecommerce in 2015.
#1: China’s internet is ‘Mobile First’
Chinese search marketers already understand the importance of mobile, with 40 per cent to 60 per cent of search traffic coming from mobile devices (depending on search investment and category). Single’s Day hammered this message home for all brands selling online.
More than 42 per cent of payments during Single’s Day were made on a mobile device. Partly this is driven by Alibaba pushing sellers to grant ‘mobile only’ discounts, reflecting its battle about mobile supremacy with TenCent. Partly it is consumers buying on the desktop and then moving to the mobile to pay to benefit from AliPay’s mobile payment convenience. But at the core, this is about the Chinese consumers using their mobile as the first or only online device. Brands need to ensure they think ‘mobile first’ to succeed in 2015 and beyond.
That doesn’t mean having an app, or even prioritising their WeChat brand account. It means: All digital assets from advertising to ecommerce, from website to social, from content to tools need to be rethought with a mobile first consumer in mind. When did you last check what your mobile TMall looks like?
#2: Local Brands ‘get’ ecommerce; global giants starting to take advantage
China used to be a market where local brands play catch up to global giants, be it Unilever and P&G or Nokia and Samsung. Ecommerce has largely been the exception. Global giants have started to take advantage Single’s Day, see for example L’Oreal group’s Beauty Box promotion, NIVEA Men’s ‘Don’t let your men cry’ or the ongoing online success of Uniqlo and Jack&Jones. But it’s China’s leading brands that grab the spotlight in the Alibaba 11.11 top 10 sales ranking, again. Eight of the top 10 are Chinese. Three of these are China’s mobile makers, with XiaoMi (#1) leading the pack followed by Huawei and Meizu. Three more Top 10 brands come from the home furnishing category, led by Mr. Ling Furniture … IKEA watch out.
So brands take note: Instead of looking at Nielsen market share reports alone (which still don’t include online sales), it’s important to look closely at who is leading online sales in your category as well. It’s just a matter of time until these nimble digital players come knocking on your consumers’ door in every channel.
#3: Ecommerce It’s not about discounts any more
Consistently (and globally) ecommerce has been driven by three key factors: Price, Selection/Availability and Convenience. Single’s Day, like much of Chinese ecommerce, has been first and foremost a price promotion. That is changing. All of the three leading mobile phone sellers did not lead with huge, Single’s Day online, price discounts. Their draw was the availability of their blockbuster handsets XiaoMi 4, Huawei Mate 7 and Meizu MX4, which are otherwise only available in limited numbers through a lucky draw. This ‘hunger marketing’ approach, while it certainly has a price component, is about desirability and availability first.
Another interesting example is the home furnishing category, which sports three more of the Top 10 Single’s Day brands. Alibaba has found success over the last two quarters in home furnishing by understanding the advantage of convenience. Instead of lugging home a new sofa from IKEA (Yes, there is IKEA in China) or paying extra to have your new dining table assembled in your home, delivery and assembly are already priced in for every piece of furniture you buy online. This is topped-off with the comfort of buying from home instead of trawling through uncomfortable furniture malls, with family and crying kids in tow. The key driver for the whole category is convenience.
Global brands in China need to start thinking outside the price box for their online offers and sales activities. Selection and Convenience are a good place to start, but understanding your buyer’s motivation to buy your product online may yield more targeted insights to customize your online offer to build a runway for success.
#4: Single’s Day; China ecommerce is more than just Alibaba
Once analyst get over the massive headline number of Single’s Day sales, they will soon realise that Alibaba’s Single’s Day revenue growth is slowing down. Some will interpret this as a sign that the ecommerce in China is loosing steam. Stopping the analysis there is a mistake. One of the key reasons for the Single’s Day’s slowing growth, surprisingly, is its success itself. In the month before 11.11, every online seller and most large brick &mortar retailers jumped on the bandwagon of awareness Alibaba has created for Single’s Day by launching their own promotions. Online, JD.com was most aggressive, but O2O players like Suning and many brick and mortar stores followed right behind.
Brands hoping to accelerate their own ecommerce growth need to understand that ecommerce in China is not about Alibaba and it’s TMall alone. Even during Single’s Day. Many other meaningful online channels exist and add value depending on your category and strategy. Carefully consider your brands maturity when planning ecommerce for 2015. A TMall + X strategy makes sense in most cases and can add a turbo-boost to your eCommerce growth next year.
As you continue your 2015 planning, go ahead and use the Single’s Day trends observed above as a sanity check for your digital and ecommerce plans. Challenge your partners for meaningful answers to the questions posed and start implementing today. 12.12, the next big online promotion day is just around the corner and 11.11.2015 planning should be a strategic initiative started no later than Q2.
Happy Marketing and Happy Selling!