11th of November is an important date for a lot of countries in the world. While most of the French people know it as a blank holiday to celebrate the end of the First World War, it has a totally different signification for Chinese consumers. If you ask anybody in China what’s happening on this particular day, they would all answer “双11” which means “double eleven”, the world’s biggest internet shopping day, also known as the Singles’ Day. And each year Chinese consumers are preparing for this particular day, for days, weeks and even months in advance!
Why? It started in 1990s when university students started to celebrate their single status on the most single day of the year 11/11 (or one-one-one-one) in the fashion of an anti-Valentine’s Day. But it’s Alibaba (Chinese E-commerce Company that provides C2C, B2C and B2B services via web portals like Taobao and Tmall) who six years ago transformed it into this big promotion day. It used this festival as an opportunity to encourage self-gifting and personal indulgence to boost sales in a rather sluggish period of the year in terms of business revenue, because right in the middle between the summer and winter sales.
In the first year of 2009, only 27 merchants participated and consumers spent 50 million Yuan on Alibaba’s Tmall and Taobao. Since then, all other major e-commerce platforms like JD.com, Yihaodian and Sunning have joined, and this shopping extravaganza day has grown into to the biggest annual battle for e-commerce companies in China. The amount spent has almost doubled each year, now surpassing the US Black Friday and Cyber Monday combined.
Through their one-stop shopping platform, these marketplaces control almost the entire online shopping traffic. Most Chinese consumers will prefer looking for a brand on Taobao/Tmall than browsing on search engine. Therefore, their destructive price-driven strategy is killing the traditional business model of retail brands. To remain present in Chinese consumers minds, brands cannot avoid being present on Tmall and participating to these big sales campaigns. And they see their sales and communication plan become totally driven and affected by these big price reduction events. While these marketplaces help them to manage their online presence and logistics, brands get charged up to 10% commission fee per sale, without mentioning deposit and technical fee. In addition, on these platforms, brands lose both control and direct access to customer data making any CRM effort worthless and almost impracticable.
So how can brands survive in this monopolistic digital ecosystem? Some are trying to get back in control by adopting a more balanced digital strategy. As we said, in China it has become mandatory for brands to be present on Tmall and other e-market places to maintain their online presence and drive brand awareness. But some brands like Zara select carefully the products they put on these big promotion days to clear out the stock. These marketplaces are only to promote standard service through a pool of discount and promotion driven activities. They transform their brand owned e-commerce channel into a consolidated platform for state-of-the-art brand communication and more personalized services.
The specific Chinese digital ecosystem doesn’t only challenge brands in China but it will definitely start having an impact also on a global scale. Now that Single’s day has become the world’s biggest online sales day, Alibaba has stressed again its focus on expanding internationally. This is clearly expressed through the big show organized for the event, following the American Super Bowl spirit. The gala was welcoming international superstars like 007’s Daniel Craig and Kevin Spacey giving a live speech from the Oval Office of House of Cards.
“Within the next five years, we expect China will become the world’s largest e-commerce market for imported products,” “said President Michael Evans, named this summer to head the global expansion of the group. The group declared also last month the opening of new offices in France, Germany and Italy to reinforce its expansion in Europe. Given the extremely high success of this online shopping extravaganza in China helping generate an outstanding yearly revenue for Alibaba, it is only a matter of time for Europeans to see this happening in their countries too. The question is: are Europeans ready to embrace this new online business model?