Can Alibaba drive growth for Singles Day 2022?

The world’s largest shopping event is just days away, but consumers are expected to remain cautious as China’s economy slows.

The impact of China’s zero-Covid policy, regulations on tech firms and the shaky economy have left China’s big-spending consumers budget-conscious and nervous about overspending.

That is not to say they won’t spend, just not with the confidence of the pre-Covid years.

Alibaba’s 11.11 Singles Day extravaganza has experienced meteoric growth since it launched in 2009, creating new record sales figures each year. In recent years the event has grown beyond one day to incorporate weeks of presales, and it has spilt across the globe, outstripping the US Black Friday and Cyber Monday events. However, last year’s event saw sales slump to its slowest-ever growth rate of just 8.5%, and this year is expected to be similar.

Ecommerce remains the fastest-growing sales channel in China, and China continues to be the largest retail market in the world, which means this event acts as something of a bellwether in terms of global retail trends.

The Drum spoke to Alibaba’s president of Industry Development and Operation Center of Taobao and Tmall, Chui Xue, about the trends and expectations for this year’s event.

Loyalty and long-term brand growth

While previous 11.11 events have seen brands focus on sales-driven promotions, this year, Alibaba is pushing brands to focus on long-term growth through loyalty programs and memberships.

“I think brands and merchants on our platform are keen to use 11.11 as an opportunity to generate long-term growth in the China market,” says Xue. “As Bain & Co pointed out in its report, [Alibaba] are making strong progress in shifting the focus to customer loyalty by investing in a smooth and consistent customer experience, from presale service and fulfillment to returns and other post-sales services.”

“[Alibaba] are supporting brands to use loyalty membership programs as a tool to attract, engage and retain consumers. We are already seeing a member led GMV growth curve on Tmall. This year, we expect the contribution of member-led GMV to become even more significant and hope it will become a key indicator to show long-term growth potential.”

Brands such as Nike and Unilever are already running brand loyalty programs through their Tmall stores, says Xue.

The use of loyalty and membership programs on Tmall has proven to be a highly effective way to engage consumers – particularly during uncertain times – and to help drive long-term growth for brands, says Xue.

During this year’s presale period, brands on Tmall secured more than 66 million new members. On November 1, more than 4,000 brands saw the GMV generated from their members more than double year-on-year, while 2,700 brands saw their members contribute more than 50% of their GMV alone. And 82 brands surpassed RMB100 million in GMV, all of which was generated by their members.

New technologies and innovation

Alibaba is banking on innovative new technologies, initiatives and a “seamless shopping experience” to help consumers spend. More than 2,000 brands will use “immersive technology” in their live-streaming sessions, including 3D shopping experiences.

“More brands are using live-streaming as a marketing tool to deepen consumer engagement and drive more traffic. This year, more brands are hosting self-run live-streaming sessions during 11.11 through Taobao Live.

“We were amazed to see that during the first hour of the first check-out window on Monday, the number of views recorded by Taobao Live increased by 600%, compared with the first hour of the first sales period last year.”

Xue says the live-streaming channels of Estée Lauder, La Mer and Lancome each surpassed RMB$100 million in GMV within four hours of the first sales window in the presales.

“Taobao Live has also become an incubator for top-selling new products for many brands. New updates to streaming rooms leverage augmented and virtual reality technology, powering a more immersive customer experience.”

Alibaba has also integrated new technologies, such as a virtual shopping avenue, which provides consumers with an immersive 3D online space to view 3D displays of their favourite brands. Sanrio, Universal Studio and Kakao Friends are all set to open next-generation flagship stores in this 3D digital space.

Alibaba’s computer-generated influencers Ayayi and Noah are working as brand ambassadors to help retailers build brand profiles and amass followings among China’s digitally-native consumers. Xue said Ayayi has partnered with over 30 high-end brands, such as Louis Vuitton, Burberry and Prada, to create marketing campaigns.

Emerging trends and new growth categories

Xue says one of the biggest trends to emerge post-Covid has been the growth in consumers – particularly Millennials and Gen Z – using cross-border e-commerce platforms like Alibaba Group’s Tmall Global, which is the platform for brands that do not have a physical presence in mainland China.

“During the first hour of this year’s check-out period, 102 brands recorded GMV over RMB100 million. Of which, over 40% were international brands,” says Xue.

The most popular products were surf-skating boards and coffee machines, which grew by over 3,000% and 1,670%, respectively. Vinyl record players increased by 530%, and cycling gear rose by more than 500%.

Another emerging trend since the pandemic has been an ever-bigger focus on health, sports products, and pet care.

“We also noticed that people have become more health conscious, and they have developed a greater appreciation of nature and animals, especially pets. This has been reflected in our product categories as we have seen very strong sales growth in pet care products and sports and outdoor recreational equipment.”

Sales of pet-related products during the first hour of the presale period surpassed the total GMV generated during the entire first day of last year’s presale period. It was a similar story in the sports categories, with everything from camping equipment to activewear, cycling gear, skiing equipment, roller skateboards, and mountaineering gear all seeing strong growth.

Fulfilment and delivery experience

One of the most significant challenges for this year’s event is the fulfilment process, particularly managing delivery expectations amidst flash lockdowns.

To counter the challenges, Alibaba Group’s logistics company Cainiao Network has secured additional warehousing facilities in 20 cities across China as “Covid backup warehouses” to support seven-day emergency storage allocation. It has also expanded its fleet of automated vehicles and recruited thousands of extra couriers to provide doorstep delivery services.