Helen Roxburgh
Nov 9, 2018

Behind the scenes of Singles Day 2018: strategies of the major platforms

Following the discount shopping festival, we look at the recent tactical shifts made by China's biggest e-commerce platforms—and why they went back to basics this year.

Two kung fu masters, who also work as couriers, deliver parcels ordered online in pre-Singles Day sales in Dengfeng, Henan province [Photo: AFP]
Two kung fu masters, who also work as couriers, deliver parcels ordered online in pre-Singles Day sales in Dengfeng, Henan province [Photo: AFP]

November 11: Singles Day, and a buying bonanza. What started as a celebration for single male university students morphed into a shopping event in 2009, when Alibaba chose the date to promote its new Tmall platform with a day of big discounts, and it is now, in its 10th year, a massive commercial phenomenon. 

Signs of slowing growth are emerging, however. Research firm Oliver Wyman predicted that shopper spend would increase "only" 9% this year, with 30% of Chinese consumers surveyed expecting to spend less than they did in 2017, because of less appealing discounts and more promotional events occuring throughout the year.

This doesn't mean bad news for retailers, however: 51% of shoppers still say they expected to spend more this Sunday than last year, with 57% expecting to buy overseas goods, and this year's Singles Day ended up smashing all previous records The sheer number of Chinese internet users—this surpassed the 800-million mark for the first time in August, meaning there are now as many internet users in China as there are people in the United States, Indonesia and Brazil combined—means China's Singles Day remains an explosive testing ground for retail and e-commerce. 

Alibaba's 'new retail' in 2018

It was also Alibaba, namely the company's chairman Jack Ma, which first introduced the concept of ‘New Retail’, and this year the e-commerce giants in China have all been developing their own versions of the data-heavy retail strategy.

In its report ‘Embracing China’s New Retail’, Bain and Co says: “People are no longer viewed only as consumers. The most forward-thinking brands also see them in the role of co-producers.”

Through its platforms Taobao and Tmall, Alibaba's recent focus has been on evolving retail from a practice with the simple goal of meeting mass demand to a model of consumer data-inspired personalised products and delivery.

A Guess concept store that opened in Hong Kong in July was a glimpse of Alibaba’s ambitions in this area. Smart mirrors offered mix-and-match clothing and accessory suggestions from Guess, as well as items sold on Tmall and Taobao, and could even match with a shopper’s purchasing history.

Guess and Alibaba's FashionAI store in Hong Kong

In July, Alibaba invested $2.2 billion in China’s Focus Media, saying the investment is part of its larger strategy to offer enhanced marketing tools and consumer analytics to merchants.

JD.com and 'boundaryless retail'

Chinese ecommerce group JD.com, meanwhile, has been developing its own strategy of ‘boundaryless retail’.

“Consumer demands are changing all the time and also vary in online and offline scenarios — they want more convenience, faster delivery, and guarantees that the products they buy are of high quality,” said Lori Chao, director of International Corporate Affairs at JD.com.

“They don’t buy exclusively online or offline, they incorporate a mix of both in their lives, based on what gives them both peace of mind and more time to focus on other parts of their lives.”

This year Singles Day Tmall and JD are going back to basics: rich content like videos, KOL posts

JD’s new platform Zu Chongzhi, named after an ancient Chinese mathematician, is designed to help offline retailers with every step of the retail process from choosing store locations to merchandise and marketing. Zu Chongzhi leverages big data from both JD’s platforms and the retailer’s offline data.

Furniture retailer QM has also used JD’s big data to understand the customer demographics of its Beijing stores, adjusting its product mix on the basis of what it sees in the numbers. The resulting addition of new products helped QM store increase traffic by 30%, and over 80% of the newly added products generated sales in the store, says JD.

“We have opened our technology and infrastructure to other companies and industries as well, to help modernise and improve the experience offered by traditional retailers,” explains Chao, saying they are also focused on blockchain technology, robotics and new energy vehicles.

Back to basics for 11.11.2018

But even as brands develop new concepts, this year they have been also focused on bringing it back to basics. For Singles Day this year, Alibaba trained its attention on core products.

The group offered pre-sale discounts, digital red packets and over 10,000 short KOL videos on different platforms plus live streaming channels. Over 200 Chinese celebrities posted a series of passcodes on social media for consumers to unlock red packets with various brands.

“This year Singles Day Tmall and JD are going back to basics: rich content like videos, KOL posts,” says Declan Kearney, MD, Edge by Ascential APAC.

“They realise the market is not ready for gimmicks such as augmented reality or virtual reality. Brands haven’t mapped their capabilities to the perhaps too-futuristic vision of Alibaba. After all, some brands have only just appointed ecommerce managers!”

Consumers are increasingly differentiating the similar offerings of retailers not just on product quality, but equally on service quality—and this is where face-to-face, human-to-human interaction is key

Even amid technological innovation, many ecommerce giants and brands have been concentrating on customer service.

“Unmanned stores are still in an early stage of development, even though they are being rolled out more widely,” says Matthew Crabbe, Regional Trends Director, Asia-Pacific, at Mintel. “Essentially big vending machines, these formats will find a place, but increasingly the most valuable pieces of technology in stores are human beings.

“Consumers are increasingly differentiating the similar offerings of retailers not just on product quality, but equally on service quality—and this is where face-to-face, human-to-human interaction is key.”

Grocery grows apace

In the move to merge online and offline retail, grocery stores have found themselves unlikely flagships of new retail. Millions of corner shops across China have become delivery stations for ecommerce, bringing them into the frontline of ecommerce.

But the last year has seen a rapid evolution of the field of grocery shopping itself, a sector Bain expects to grow at 13% annually until 2025.

In the last year JD has opened around 20 X-Mart unmanned convenience stores, and launched 7FRESH, an offline supermarket chain for fresh food. These stores are supported by JD’s smart supply chain management system, including auto-replenishment to ensure the shelves are in stock and not overstocked, facial recognition for payment, and big data to determine the product mix and location for new stores.

Alibaba expects to grow its current portfolio of 20 Hema grocery stores to 2,000 over the next three years, in addition to rolling out New Retail across its Intime, RT-Mart, Auchan and Suning chains. The company will also dive into experimental retail projects such as vending machines selling anything from live hairy crabs to new cars.

The first physical 7Fresh store before it opened in January in Yizhuang district, Beijing

In April, Alibaba bought full control of food delivery brand ele.me, in a deal which valued the startup at $9.5 billion.

Tencent is hard on its heels, announcing last month it was forming a $170 million grocery joint venture with Shanghai-listed supermarket operator Yonghui Superstores and Hong Kong’s ParknShop, plus digital integrations with Carrefour, Wanda Plazas, unmanned WeChat stores and 1,000 7Fresh grocery stores in conjunction with JD and Walmart.

Large corporations have also been signing digital partnerships, examples being recent deals between WeChat and Lego and Alibaba and Ford, in a bid to leverage the ecommerce giants’ huge data holdings and technological capabilities.

“Brands and retailers need to keep an eye on each other, the application of innovative new technologies and keep up with rapidly changing consumer demands, all at the same time,” says Crabbe.

“They cannot, any longer, assume that these changes will come sometime in the future and delay response. They have to be ready to act as soon as new innovations are even hinted at in the market.”

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