Eve Lo
Nov 27, 2014

The 11.11 Debrief: Beauty of the 'last mile'

2014’s 'Double 11' is done and dusted. Tmall's total turnover of RMB 57.1 billion significantly surpassed last year’s RMB 35 billion. While everyone has focused on this outstanding figure, Isobar’s Eve Lo looked beyond this to what brands and retailers can learn from this frenetic event.

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Editor's note: This article is one of several in our complete 11.11 Debrief

One month before Double 11, sales might have declined because consumers were waiting for the shopping carnival. So even though the 57.1 billion Singles Day sales may seem astonishing, it is no more than 8-10 days’ turnover of the total online shopping expenditure in China. According to iResearch data, the transaction of China’s online shopping market is estimated to be RMB1.84 trillion for the first 3 quarters .

At Isobar we usually say that the purchase is the last mile of the consumer's brand journey, and this RMB57.1 billion is no doubt the best witness of that. When brands and online retailers are able to take advantage of this figure to understand the consumer journey to this very last step, then getting the next RMB57.1 billion will be a piece of cake. Let's take a look at what we have learnt from this year’s big Double 11 show.

Pushing limits

What is more important than money is the ability to earn more money. Undoubtedly, online retailers know this truth very well, and that is also their biggest win in this battle. At the peak of Double 11, 70,000 orders occurred in one second. This required excellent capacity for platform operations, which included ensuring timely product inventory search updates and product browsing speed, not overselling, and speedy checkout for payment. This year there were still many consumers who were unable to recharge their Tmall Bao and Yu’e Bao at the very beginning of the event and this is something online retailers must optimize in the future.
Other challenges include logistics and customer service. The total number of parcels for Tmall reached 278 million during this period; a total of 14 logistics companies were mobilised, with 1.25 million couriers involved in delivery. In previous years, consumers and competitors criticised delivery delays after Double 11. This year, Tmall set a record of its first delivery within 15 minutes—an Omar refrigerator bought in Guangzhou.

To do this, Tmall invested in nearly 2,000 customer service staff. Additionally, each of the 27,000 brands that sell on the platform had its own customer service staff, resulting in an estimated one million people across the customer service sector, greatly enhancing response time.

Expanding into new categories

The ambition for online retailers is to sell everything you can imagine.  Besides clothing, home appliances, and mobile phones, online retailers dare to break the stereotype, and expand into a wider range of product categories, among them automobiles and real estate look to become especially promising.

The biggest order this year took place on Suning: a customer bought an apartment on the 11th at 14:12 at a price of RMB1.52 million. The original price was RMB1.84 million. Together, JD.com and Yuanyang real estate also launched a crowdsourcing project: 11 participants were given the opportunity to buy real estate at 89 per cent off the normal price.

Car retailers are beginning to realise the historic leap from precise set-off to the transaction. Autohome.com.cn sold 37,117 cars on the 11th, and the total order amount was for more than 6 billion, covering 386 cities, 72 car brands, 3838 models, and 7352 dealers. Ford, Toyota and Buick topped the ranking.

Enhancing interactivity

Mobile clients increased enormously this year. Transactions from mobile devices reached 24.3 billion, 4.54 times that of last year, and accounted for 42.6 per cent of Tmall’s total turnover, creating a global mobile transaction record in a single day.

Mobile online shopping is becoming a big trend. For online retailers, it is particularly crucial to understand how online consumers are switching among their devices, because it can help them design more convenient user interfaces, grasp the key points from search to purchase by the consumers, so as to improve the conversion rate.

Dare to create the record

Tmall also knows what “bigger than bigger” means, so they decided to try and break a Guinness World Record, further increasing their visibility worldwide. For this reason they invited an independent third party, PwC (PricewaterhouseCoopers), to scrutinise Tmall mobile phone transaction numbers and total turnover of online sales. PwC started the work before Double 11, implementing a programme to verify and ensure the authenticity of the final data.

And break a record they did. Tmall set a new Guinness World Record to become the company with the highest online retail sales in 24 hours and the platform selling the most mobile phones in 24 hours. During this period, Tmall sold 1,894,867 mobile phones.

Turning shopping into socialising

According to the survey data published in 199IT by iimedia, nearly 46.9 percent of people agreed that they were highly or very much looking forward to Double 11. Just 15 per cent had low or no expectations . Some netizens even said humorously, “shop first, and then date second to end singles day”.

Cheaper prices are not the only thing consumers got from this online shopping bonanza. The slogan of Tmall for this year’s Double 11 event was 'Shopping globally'. Consumers enjoyed the convenience of overseas online shopping. Costco was invited to join Tmall International. By using the cross-border platform, products from more than 20 countries and regions were able to be delivered to Chinese consumers.

In addition, the whole shopping experience went viral across social channels. Double 11 became the main content of social platforms. Consumers created a circle of friends to talk about how they were preparing for their shopping cart, recommended great deals to each other; and after the purchase, they continued to discuss their experience in terms of product and service. People joke that all female consumers are the “women behind Mayun (who is the founder of Tmall and Alibaba)". It’s not just about a shopping experience, but also a social experience.

Optimising brand experience

In addition to the short-term revenue increase, the impact of Double 11 on the long-term marketing strategy of a brand is more important. 

Xiaomi sold 1.16 million smartphones through Tmall during Double 11 with total sales of RMB1.56 billion, accounting for 2.7 per cent Tmall’s total turnover of the day . These 1.16 million units are 1.16 million chances for consumers to experience the brand, which is not an easy task for most brands outside this arena. Xiaomi offered special discount on Red Mi, one of its smartphone models, which already has a relatively cheap price, to achieve massive penetration. It also helped to bridge with other Xiaomi products. For instance, its flat screen TV is the sales champion in the TV category even though this is the first time the product joined Double 11.

Huawei was also not left behind. It’s “Honor” smartphone series opened for pre-order before “Double 11”, and it carried out a full online retail strategy, which proved to be successful. Except for second place on Tmall, Huawei was the number one seller for the mobile phone category across the other five platforms (JD.com / suning.com / YHD.com / Amazon.cn / VIP.com). The connection established between the brand and the customers in this instance will have a huge impact on the company’s future brand promotion.

P&G LivingArtist used the low price as the motive for consumers to bulk buy its products, and it bundled different products under the same brand to make it possible for consumers to give them a try, increasing the possibility of purchase the next time.

Bettering O2O platforms to manage inventory

Uniqlo ranked No.5 on this years’ Tmall turnover list, and female clothing itself generated more than RMB 200 million in sales. Their strategy was to offer a special price on limited items plus coupons. When those limited items sold out, consumers were pointed to other products. Using this strategy, Uniqlo cleverly solved an annoying problem for most of the retailers: inventory. Tmall is also one of the tools that Uniqlo leveraged to move consumers from online to its physical stores, via its mobile platform and Apps as part of a flexible O2O platform that Uniqlo has built since 2008. In addition, Uniqlo projected the market size according to the delivery locations from online sales, in order to give guidance for choosing its next physical store .

Using big data to develop marketing strategy

As one of Tmall’s original brands, Handu.com is this year’s female clothing sales champion . It has its own strategy to stand out from other already established traditional brands. Handu constantly changes and improves its marketing strategy based on its online sales experience. For example, using the sales data from last year, Handu.com increased inventory of certain products from categories such as down coats, cotton dresses and wool coats, which sold out last year. It also provided special items for this year’s Double 11 based on market trends, started pre-sales in October, and used its owned channels to encourage customers to add products into shopping carts, recharge in advance, etc. to increase its sales.

For brands, to ensure their sales win at next year’s Double 11, but also guarantee the sustainable success of their brand it’s imperative to find out the relevance between a consumers’ purchase action and their searching/browsing/adding as favorite/adding into cart behavior using the big data from the “Last Mile”. Based on this data the brand can then figure out the best strategy for new product development, stock inventory, and a marketing plan.

Summarising it all

Technology has enabled consumers to proactively interact with brands in their own ways any time anywhere, and it’s important to leverage this technology to integrate online and offline data to track consumer brand experience.

By doing this brands can deepen their knowledge of their consumers and use it to guide their business and marketing strategy.

At Isobar we believe brands should no longer consider e-commerce as just another (marketing channel) rather that e-commerce needs to be the basis of their business.

By understanding how the consumers came to the 57.1 billion last mile, and adjusting the contents and forms of the brands interaction with consumers, Double 11 will go beyond being just a sales success, to achieving a full, long-term brand marketing success.

Eve Lo is principal of brand strategy at Isobar China

 

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