There seems to be a perception among US retailers and retail-watchers that Singles Day, or 11.11, is China’s e-commerce version of Black Friday. In fact, headlines have called it that. But there’s more to the story. It’s a story global retailers need to understand.
Yes, Singles Day is a big shopping day. Alibaba recorded USD $17.8 GMV (gross marketplace value) on 11.11.16. Headlines have screamed that growth slowed to “only” 32%. I don’t know what else is this large and still growing this much — certainly not Black Friday and Cyber Monday.
But it’s not just about shopping. And unlike the US shopping holidays, discounting isn’t the focus of the event. While US consumers rely on e-commerce for efficiency, the Chinese consumer expects shopping to be fun, even online (including on mobile, which made up 82% of GMV). During the Singles Day kickoff gala* Alibaba held on the evening of 11.10, the focus was more on entertainment and games than on the acquisition of physical goods. Those watching from home could:
- Compete to win products by using a mobile camera to scan items being shown on stage
- Show performers love by tapping their phones (and get recognized on stage for high numbers of taps)
- Vote in real time to “direct” what would happen next in the live show
- Virtually cheer for different celebrity teams during on-stage games; supporters of the winning team won access to additional products
Yes, what’s been re-branded as the 11.11 Global Shopping Festival was started by the China-based company Alibaba. Alibaba remains the primary beneficiary of the event, although its nearly 100,000 merchants also saw a piece of the action.
But Walmart and JD.com made plays to capitalize on the Singles Day buzz with competing offers and a number of brands advertised on Dealmoon.com to reach Chinese Americans. I’m surprised more retailers haven’t gotten involved. I think we'll see more attempts in the future.
Beyond just competing with Alibaba, I hope more brands will leverage Alibaba’s reach. This year, international brands represented 27% of GMV on Tmall and Tmall Global (the Alibaba platforms where they sell). 37% of Singles Day customers bought international brands and 235 countries were home to buyers or sellers. Victoria’s Secret participated live in the kickoff gala (see photo). Target was a vendor on Tmall Global.
Alibaba is working to make it easier for companies around the world to do business, ranging from Russia (where Alibaba has high market share even though) to Brazil (where imports are needed because manufacturing is so expensive). Executives say the future of multinationalism is in small businesses, brands, and retailers -- not in transnational corporations.
And, yes, most of the transactions start online. But the shopping isn’t restricted to consumers with a computer or even mobile device: Through its Rural Taobao initiative, Alibaba has set up 20,000 stations in rural China where Taobao (another Alibaba platform) employees help village residents place online orders.
It’s easier than it should be for global retailers to ignore rural Chinese consumers today. But access to this population is one reason Alibaba can continue to grow so quickly. Alibaba’s platforms are the only way much of the world can tap this population.
I also heard Alibaba executive after executive talk about a commitment to driving shoppers to local stores, which is an effort the company has gamified through location-based activities.
Finally, the world should be aware that Alibaba isn’t just a retailer. While many would say Amazon is also a tech company or a logistics organization, I see much more innovation coming from Alibaba. Beyond the gala entertainment I listed above, there’s plenty of tech global retailers should be watching:
Payments: 82% of Singles Day transactions were processed through Alibaba’s homegrown AliPay payments system; I got a demo of robotic and augmented reality technology that will be used offline to enhance the network effect for consumers of using AliPay
VR: Alibaba’s virtual reality glasses allow consumers to see/click/buy from the inside of faraway retail stores (impressive but dizzying); related technology is being leveraged for warehouse logistics purposes
AI: Traffic has been reduced in Hangzhou (Alibaba’s HQ) by Alibaba’s artificial intelligence work
IoT: Among other inventions, we saw a kitchen with cameras that can take real-time inventory of food so users know whether they have what they need to make tonight’s dinner before heading home
Social: Taobao offers commerce features that are more compelling to the Chinese consumer than anything that’s been developed for other consumers around the world
* Alibaba subsidized my trip. No one has asked me to write about the company nor the 11.11 Global Shopping Festival. I don't own Alibaba stock.