Thinking outside the box. This has been the life motto of Jack Ma, founder of Alibaba and, while it is unquestionable that the e-commerce giant wasn't really based on any extremely new models, his motto genuinely worked when it came to certain retail strategies or events like Singles' Day.
Held every year on 11th November, Singles' Day, 11.11 (so-called as the numerals resemble single individuals...) or Guanggun Jie was first celebrated in the 1990s by young, single Chinese students as an anti-Valentine's Day and an excuse to buy themselves presents.
In 2009, Alibaba co-opted the informal celebration and started using the date to offer 50% discounts at retailers on its e-commerce platform Taobao.
Little by little and slowly yet relentlessly, Singles' Day transformed into a mighty shopathon, China's own celebration of consumerism with more power to shift goods than the Black Friday and Cyber Monday sales days in the United States combined.
In 2016 Singles' Day sales reached $5 billion in an hour with a total of $17.73 billion worth of sales in one day; last year Alibaba hit a new record reaching $5 billion in transactions in less than 15 minutes and closing with $25.3 billion of sales (a 39% increase compared to Singles' Day 2016).
This year Singles' Day topped $5.3 billion in 12 minutes, closing at $30.8 billion in sales (an increase of about 27% over last year's total; the slower growth compared to the previous year may be due to the fact that the festival is becoming more known).
Celebrations were in typical Alibaba style: there was a countdown gala in the hours leading up to the stroke of midnight on 11th November and a live broadcast on two Chinese satellite television channels. Local and international acts performed, among the others singers and musicians such as Mariah Carey and Jay Chou, the Cirque du Soleil and model Miranda Kerr.
Company founder Jack Ma didn't give a speech, but made an appearance on a screen, maybe conjuring up visions of extremely wealthy lifestyles à la "Crazy Rich Asians". Yet Singles' Day is not just for rich shoppers, but for all sorts of consumers and, looking from the statistics, for consumers based all over the world (in 2007 Russia, Hong Kong and the US were the main three non-Chinese Singles' Day markets).
Singles' Day has indeed been spreading from China to South Korea, Southeast Asia (where online shopping is a relatively new venture; Alibaba also has an AI-powered tool that provides instant translations from English to Thai, Vietnamese and Indonesian), Europe and North America (AliExpress, Alibaba's global retail platform, offers an AI-translation tool allowing English speakers to communicate with Chinese, Russian, Spanish, French, Arabic and Turkish speakers).
Singles' Day 2018 will be remembered for representing Alibaba's expansion in Southeast Asia: its subsidiary, Singapore-based Lazada, offered indeed special discounts in Singapore, Malaysia, Indonesia, Thailand and Vietnam.
China-based consumers often expect to buy overseas goods during Singles' Day and Japan, the United States (despite Trump's trade wars...) and South Korea were the top three countries from which shoppers bought goods this year.
Xiaomi Corp., Apple Inc. and Dyson Ltd. products were the top three brands in early sales, but consumers bought a wide range of items, from smartphones and TVs to clothing, furniture and health products. There were also interesting extremes represented by high end products such as cars and daily perishables like toilet paper.
The shopping extravaganza with massive proportions is usually supported by a solid marketing campaign (this year it kicked off in June...), but this time Alibaba offered some new features to shoppers. The emphasis was indeed on strengthening the link between online and offline retailers. Alibaba's Tmall and Swire Properties opened a brick-and-mortar shopping mall in Beijing at the beginning of November to mark the event; besides, Alibaba's Tmall shopping site offered tie-ups with 200,000 brick-and-mortar shops (selling 180,000 brands). Ele.me, Alibaba's food delivery platform, also provided delivery for select Starbucks stores across 11 Chinese cities (Starbucks did a deal this year with Alibaba to work together in China).
That said there may be some problems for Alibaba as its latest quarterly earnings report highlighted sales of 85.15 billion yuan for the three months ending September. Although that was a 54% increase compared to the previous year, it fell short of the consensus forecast of 86.51 billion yuan.
China's slowing economy could be attributed to the falling stock markets and the trade war with the United States; that said, growth may be slowing, but it is not stopping and this may mean that there are lessons to be learnt for retailers based in the West as well.
Alibaba's strength at the moment is indeed represented by considering online and offline as parts of the same coin, and trying to create deals and bonds with brick-and-mortar stores. Amazon has been trying to do the same recently, but at times it hasn't been too consistent: there have been experiments with Amazon pop up shops and events with selected brands such as Calvin Klein, but Europe hasn't seen too many of such initiatives. Alibaba has instead been focusing on what it calls "new retail" strategy (the Starbucks deal is part of it), a way to take the O2O (Online to Offline) model forward and merge the digital and the real world by offering or advertising special deals in stores. The concept was already presented by Jack Ma in 2016 and it was conceived as a combination of offiline, online, logistics and data across a single value chain. The "new retail" principle was applied to Alibaba's Hema Supermarket where innovations include for example barcode scanning on mobile to reveal product information and recommendations of complementary products (things you may find in Amazon's temporary pop up shops), but also the possibility of paying or opting for a free delivery via the Hema app, solutions that offer consumers a personalised shopping experience.
Alibaba also aims at increasing sales by forging different collaboration agreements with brands and online platforms, creating an ecosystem and empowering sellers and vendors; Amazon is instead a gigantic empire with a sort of conflicting attitude towards its own vendors (especially small and independent ones), who often even end up seeing their products censored or blacked out in a random and casual way (usually it happens because they are considered as "offensive", but criteria are puzzling as adult toys may not be censored while a book, manga or DVD for the adult market may end up being censored for common decency reasons regarding their covers...). So, while the two e-commerce giants are different, there things they could learn from each other.
It will be intriguing to see where the "new retail" strategy will take Alibaba, but you can bet that Singles' Day 2019 will be even more stellar: Jack Ma is stepping down next year and hand over the reins to Daniel Zhang, CEO of Alibaba and key architect of the Singles' Day event, so something may be up his sleeve already. In the meantime, he may want to consider one major issue regarding the shopping extravaganza: Alibaba expects 1 billion packages to get shipped this year, something that will have an impact on the environment. Looks like Zhang will have to deal with this aspect as well before organising the next shopping gala.
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