Credit: Shutterstock photoWith the big day nearly here, anticipation is running high. While participation levels in certain areas still remain uncertain, record turnout is nevertheless expected. Indeed, millions of people have already locked in their choices, although they presumably have a chance to change or update those picks if they so desire. In the meantime, a major player is attempting a rebranding effort, and a slew of unprecedented events have been and will be held in an ongoing bid to influence the decisions of as many people as possible in advance of the official date.
That’s right: Singles’ Day 2016 is almost upon us, and the retail sector, both in the U.S. and internationally, awaits the results with great interest. The shopping holiday got off to a fairly innocuous start in China, but it’s grown exponentially since then, giving Alibaba (BABA) CEO Jack Ma reason to hope that his ultimate goal — to reinvent e-commerce in a way that transcends borders — will one day be realized.
Singles’ Day, as we discussed here last year, is said to have originated in 1993, when a group of male students at Nanjing University decided that November 11, i.e., 11/11, was an ideal date for a celebration of singlehood. Their idea turned into a popular movement over time, and Alibaba saw a chance to monetize it. In 2009, the e-tailer used its two e-commerce platforms, Tmall and Taobao, to promote retailers’ deals that urged single people to pamper themselves while encouraging others to buy gifts for their unattached friends.
That first Singles’ Day generated $7 million in sales, a not-insignificant sum in China’s fledgling market economy, but hardly noteworthy. Undaunted, the Alibaba team redoubled its efforts and soon saw dividends. In 2010, the shopping holiday attracted more brands offering bigger savings, which incited JD.com, Alibaba’s main Chinese rival, to hold its own Singles’ Day promotion. In 2011, Alibaba sales totaled $820 million, a hundred-fold increase in two years — and that was just the beginning of its remarkable revenue returns:
- 2012: $3.04 billion
- 2013: $5.8 billion
- 2014: $9.3 billion
- 2015: $14.3 billion
Singles’ Day sales surpassed Cyber Monday sales in 2012 and have doubled them (at least) in succeeding years; last year, shoppers placed $1 billion worth of orders in the first eight minutes alone. This ongoing surge in growth has created high expectations for this year’s event. Ant Financial, Jack Ma’s payment unit, predicts record sales once again; one research group is estimating a 40% increase to $20 billion in sales.
To meet those forecasts, Alibaba has implemented a promotional plan that goes far beyond its previous scope. Retailers have been offering early-bird deals for years, allowing shoppers to add items to their carts and lock them in at special prices well ahead of Singles’ Day, but Alibaba is taking a much more active, expansive marketing role this year. Rather than focus on the 24-hour sales period on November 11, it’s holding a series of events throughout the 24 days leading up to it:
- From October 21 through November 11, over 600 international companies will try to build awareness of their brands and their Singles’ Day deals among specific consumer groups via live broadcasts streamed on Tmall.
- On October 24, Tmall, Youku, and Mobile Taobao live-streamed an eight-hour fashion show, which included a “see now, buy now” component that let viewers click on any item and buy it instantly. The featured apparel will remain on sale through November 11.
- From November 1 to Singles’ Day, Chinese shoppers can take virtual, 360-degree shopping trips to eight foreign stores, including Macy’s and Costco, where they can browse, select, and buy items through a virtual reality shopping program called “Buy+.” Taobao headsets allow them to stare at any product to select it; they can then purchase it with the payment information they’ve stored on the Taobao app.
- Alibaba is using its recently-increased stake in Intime Retail, which owns and operates Chinese shopping malls and department stores, to try to bring Singles’ Day (and its own reach) offline. The plan includes a location-based mobile game that encourages consumers to follow the Tmall mascot to various retail sites in pursuit of special prizes.
- Katy Perry and Victoria’s Secret supermodel Siu He will headline Alibaba’s 11.11 Countdown Gala Festival in Shenzhen on November 10. The show will be directed by David Hill, a Hollywood producer whose credits include NFL games, Academy Awards telecasts, and two seasons of “American Idol.” Last year’s four-hour gala, featuring Daniel Craig, Kevin Spacey, and other entertainment stars, was seen by nearly 100 million people in China.
Those 100 million viewers are just a fraction of the real Singles’ Day attraction for global retailers. There are over 600 million middle-class consumers in China, and that number will rise in the coming years. Just as enticingly, a 2016 McKinsey survey found that, as a group, they’re confident about their financial futures, interested in new products — particularly premium products — and are quick to adopt new trends and services. As such, they comprise a huge, highly desirable market for any brand with international ambitions, and Singles’ Day offers those retailers the surest, easiest way to reach that group right now.
Not coincidentally, these corresponding interests also dovetail with Alibaba’s vision of China’s future. As its president, Michael Evans, said last year, “Within the next five years, we expect China will become the world’s largest e-commerce market for imported products.” That’s why Alibaba continues to focus on bringing foreign brands into Singles’ Day festivities.
That said, the McKinsey study also found that Chinese middle-class shoppers increasingly believe they need to save money. A growing number of companies are using Singles’ Day to introduce themselves to these consumers via special deals. Newer entries (and premium brands in particular) therefore run the risk of Chinese shoppers becoming accustomed to purchasing their wares only when they’re available at a discount. For now, though, the potential rewards outweigh that concern.
For Alibaba, the bigger concern is likely the tepid response to the shopping holiday, at least to date, in the second-largest e-commerce market in the world. Per an Adobe report, U.S. shoppers spent $1.35 billion on Singles’ Day 2015; while that marked a 10% year-over-year increase, the day ranked 24th among U.S. online shopping days for the year. Furthermore, Singles’ Day received 75,000 mentions on social media, significantly fewer than Veterans Day received that day, suggesting that consumer awareness of the event has a ways to go.
Singles’ Day faces other challenges here as well. There are already quite a few established sales events in November and December, which means retailers and shoppers alike have to decide where best to focus their attention, budgets, and energies. In addition, the “indulge yourself” concept behind Singles’ Day, which was driven by forces unique to China, contrasts with the spirit of the holiday season in the U.S., where consumers typically shop for family and friends. All the same, an increasing number of U.S. retailers see an opportunity to put themselves at the forefront of a burgeoning global holiday and are therefore offering Singles’ Day deals in this country. Indeed, two Clarus Commerce owned-and-operated programs, FreeShipping.com and ShopSmarter, are holding 20% cash-back promotions on that date, doubling their standard 10% cash-back benefits in response to heightened interest among our network of over 1,000 online retailers.
For its part, Alibaba has been taking concerted steps to widen and strengthen the event’s appeal far beyond China. For starters, it’s trying to rebrand the shopping holiday as the “11.11 Global Shopping Festival” in English-speaking materials. As noted above, it’s also enlisting globally-recognized entertainers to promote Singles’ Day across continents. Its heavy emphasis on substantially expanding its list of international brands should also help bolster familiarity with the event among consumers in countries where those firms already do business.
Ultimately, Jack Ma wants to create an international e-commerce market with Alibaba at the center of it. To do that, of course, Alibaba will have to contend with Amazon, which already has its foot in the Chinese market. In fact, Amazon just launched its Prime service in China; for an annual fee of about $57, members receive free shipping on millions of overseas orders totaling $29.50 or more. Amazon is still struggling to compete with Alibaba and JD.com in China, but from a global perspective, the U.S.-based e-tailer is likely better positioned right now to extend into foreign markets than either of those two companies.
Singles’ Day 2016 is already underway, with more than 5,000 brands from over two dozen countries competing for the hearts, minds, and wallets of hundreds of millions of consumers around the world. The battle for global e-commerce dominance will play out across a variety of fronts in the years to come, but for the moment, all eyes in the retail industry will be on the results of this year’s event.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
