The 14th 11.11 Singles Day shopping festival in China officially kicked off presales last Monday (October 24). Unlike last year’s eye-catching green strategies from Tmall and dynamic brand debuts in the metaverse, this year a more quiet shopping festival has emerged, forming an opportune time to rethink the role of the year's top shopping festival.
From GMV to brand loyalty
Bain & Company has cooperated with Tmall to conduct research and publish reports from luxury goods to pet care products over the past few years. In its most recent study, China’s Singles Day 2022: Loyalty's a Better Goal than RMB 1 Trillion Sales, the research firm raises questions around the shopping festival, its omnichannel shopping experience and differentiation of retailers’ value propositions.
The report looks at Tmall’s loyalty member recruitment and membership operation for brands as well as Alibaba's own loyalty programme, 88 VIP, pointing out the benefits that could be gained by making loyalty programmes a top priority for the 2022 shopping festival.
Data from Tmall shows that more than 40 brands have loyalty membership programmes that surpassed ten million members and 600 brands with over one million members.
"Singles Day, even with the changes in consumer behavior, Covid and impact of global macroeconomic conditions continues to be a priority for China retailers," said Kelly Liu, head of Bain & Company's Greater China retail practice. "Singles Day and the 618 Festival still generated 12% of all online retail sales in China in 2021. However, the engagement is now being driven more by customer loyalty."
Spending outlook and the role of discounts
Another reason to shift brand priorities towards loyalty comes with an increasingly crowded retail sales calendar with more consumers jumping between platforms. Bain's research found that 69% of consumers say they plan to shop across three or more platforms up from 56% in 2021 and only 24% said they were planning to spend more during Singles Day this year, a much gloomier outlook than in 2021. Chasing fickle price-driven shoppers is a difficult job.
"China retailers have an opportunity to respond to the challenges found in Singles Day and the external environment," said James Yang, partner in Bain & Company's retail practice. "By making the pivot from discounts to loyalty, retailers can win at Singles Day and gain engagement with consumers throughout the year."
However, not all retail strategists agree with Bain's spending outlook or the idea of shifting away from discounts. In fact, AlixPartners’ 2022 annual survey tracking the 11.11 shopping festival has found that nearly 60% of consumers are looking to increase spending this year, and younger consumers are more likely to increase their spending. Discounts are still attractive to consumers and the Double 11 shopping spree is well-known for its bargains compared to other festival sales.
Pete Lin, North Asia CEO of We Are Social still believes that discounts and promotions are the best way to drive up ecommerce sales, at the least given the current complex economic condition. "Frugality is the fashionable theme currently in Chinese mainstream culture," he says, "so I expect brands that offer high value-for-money to do well”.
“Every year, consumers comment on the level of discounts offered during Double 11," notes Sabrina Li, managing director of R3 China. "Things always seem to cost less than usual. However, these low prices are attached to increasingly complicated requirements or prerequisites.”
Trying to find ways to offer extra discounts can be tricky and has created headaches for some brands. Last year, for example, L’Oréal stirred up controversy because of price discrepancies between a product sold in its livestream presales compared to cheaper official Tmall sales when the actual festival began.
Li agrees that there could be more benefits for brands to focus on their own consumer engagement rather than chase discounted sales at festivals. Brand marketers, she says, “have realised the importance of first-party data. Since not every brand has direct control of retail prices in-store, more emphasis could be put on self-owned channels (online and offline), which is why there might be waning [appetite for] shopping festivals in November.”
In this sense, Lin also recommends a “cool-down” for brands in November, to seek longer-term benefits instead. “I would advise brands to curb their enthusiasm for this Double 11, as China is only starting to recover from the economic downturn in the first half of 2022. If I were a brand manager, I would save my budget for the next shopping season, which is Chinese New Year 2023”.
The role of livestreaming
During the so-called “coldest 618”, Alibaba did not disclose the GMV of the June shopping festival and much of this had to do with suspension of live streaming during Covid restrictions that included livestreams from top KOL Austin Li.
Now, after the first night of the Double 11 presale, when Austin Li was back to live streaming, Chinese media reported that overnight GMV (gross merchandise value) reached 21.5 billion RMB, more than the combined number of the presale live streaming by Li and Viya last year. However, Li’s company denied the numbers citing inaccurate data and lack of evidence, so the jury may still be out on the impact of livestreaming efforts.
We Are Social's Lin, for one, is sceptical. "With the economy in its worst shape in years, I don't think live streaming icons (which are fewer and further in between now) will be able to convince consumers to continue to make impulse buys into the height of the 11.11 season," he says. "This is another way of saying that Austin Li's day one success was probably more hype than substance”.
At R3, Sabrina Li prefers to focus on how livestreaming, including Austin Li’s online talk show 'All Girls’ Offer’ is only one component of a wider marketing strategy. While noting that the show creates a bond with fans through live commerce and content marketing, she says it also can reflect how brands are shifting their focus back to educating and building trust with consumers.
"Livestreaming might have the advantage of converting sales quickly, but it will never be a main medium for the overall population,” Li adds.
Meanwhile, competition between livestreaming platforms continues to heat up. This year, leading KOL Luo Yonghao joined Taobao's live commerce event, rather than Douyin’s live session. But Douyin’s performance in live commerce has been catching up aggressively to others. In fact, 58% of respondents who plan to participate in live streaming intend to use Douyin, up from 38% last year, according to data released by AlixPartners’ annual survey.
In light of traffic monetisation, even Bilibili, a video-sharing site popular among Chinese Gen Z, has joined the ecommerce shopping bonanza and launched its own live streaming shopping function ahead of Double 11, even though they still have a long way to go to catch up.
Tmall continues to promote greener sales
Tmall/Taobao remains the most significant player in green shopping. Alibaba coordinated with brands to once again create deeper online interaction through membership programmes and promote a greener shopping experience.
This year, Tmall is labelling low-carbon products across more shopping categories, such as apparel, food and cosmetics as called for by the Tmall Green Alliance last year.
Meanwhile, to better engage with consumers, brands such as P&G, Haier, ThinkPad and Yili co-branded with Tmall to make sustainable shopping bags and send them to consumers as gifts. According to data provided by Tmall, one crossover bag is made from 6 sourceable recycled PET bottles.
The right brand engagement strategy
Chui Xue, president of industry development and the operation center of Taobao and Tmall, noted in Alibaba's 11.11 live blog that sales partners continue to find new ways to engage with their shopping audiences, despite the challenges of the past year. “This year has been extraordinary, and merchant partners have gone through a journey with us to find certainty amid uncertainty.”
Advising on how to build long-term engagement with consumers, R3's Li says “brands must customise their marketing and communication strategies for each tier of the consumer pyramid. For shoppers who prioritise pricing, marketers need to invest in brand education.”
Discounts, promotions, and live commerce are all short-term solutions that might help speed up consideration from consumers. But it could lead brands to lose future business due to diluted profits. Li argues “for more sustainable return, brands need to think about long-term engagement beyond ecommerce and interrogate their omnichannel strategies”.