The East has exported cultural phenomena at an increasing rate over the past few decades, from anime to K-pop, and the latest sensation to make waves is the shopping-focused festival Singles Day.
The festival has been nurtured in recent years by Alibaba and I’m very impressed that the company turned the event into not only a big sales day for its own website, but also a national day that has increasing world-wide awareness. Alibaba wants to harness the energy and excitement surrounding Singles Day to attract global brands to its platform and move into new markets.
This year it hired US pop star Katy Perry as its ambassador to give the festival more of a global focus – although she cancelled her headlining performance to kick off the event in China at the last minute.
Analogies can be drawn with Amazon’s efforts to establish Black Friday as a fixture of the retail year. However, Singles Day sales dwarf Black Friday thanks to China’s huge population and the combined purchasing power of its consumers. Alibaba claims that in the first 12 hours of the event on 11 November sales had reached the equivalent of $12.1bn and its takings look set to smash last year’s record of $14.3bn. Comparatively, US overall online retail sales for both Black Friday and Thanksgiving last year totalled $4.45bn (Amazon took approximately 35% of sales).
Some are questioning Singles Day sales data but I don’t think this is a Chinese problem specifically. Everyone always tries to inflate their numbers. Personally, I don’t believe the data is exact but the key is to read across different sources and find a middle ground and there is no challenging the scale on which Alibaba is operating.
Why is Singles day taking off like a Chinese rocket chair? First off, it has an appealing back story rooted in the genuine insight that single people want to celebrate and be proud of their status.
In contrast, no-one is absolutely clear about Black Friday’s origins and its surrounding marketing certainly lacks engagement and warmth.
Interestingly, when looking at sales demographics, more than 60% of shoppers are married individuals and only 40% are singles. This highlights the fact that Singles Day has transformed into a China-wide popular online shopping date for everybody and as such it is heavily promoted by all e-commerce players.
To this, we can add the familiarity and simplicity of shopping via mobile in China, which means sales can spike quickly. The payment process is very well integrated into social platforms, such as WeChat. Chinese people use their phones to discover products and Chinese mobile tech platforms are so good that people can go through the whole customer journey on the platform. Close to 50% of total sales via popular Chinese e-commerce players were completed on mobile devices last year.
What are the challenges for brands looking to engage with Singles Day next year? Obviously, ‘you have to be in it to win it’. Ever brand pushes its product on that day and if you don’t have a lot of discounts to offer you can lose market share to competitors. Even big luxury brands that tend not to offer discounts should still be involved in Singles Day somehow.
However, brands need to be aware of the huge amount of counterfeits on sale and how this might undermine their own value and brand equity. Although large Chinese e-commerce players claim to have aggressively cut down on fakes, the reality is that every year a large number of customer complaints are received and the State Administration for Industry and Commerce says around 40% of online purchases in China are for low-quality or counterfeits.
To counter-act counterfeiting it is crucial to highlight the authenticity of your own product. For high-end luxury brands, sales are often unavailable and customers should be made aware of the fact that any discounted products found are not authentic. To get attention, luxury brands should focus on the buying experience they offer, for instance special packaging or adding in extra samples.
For other brands that do offer discounts, highlight the special or limited editions on your site, which counterfeit product sites will not yet be aware of and emphasise the authenticity of the products. If possible, add a certified brand logo label to the product.
The success of Single’s Day is spreading beyond China with strong sales figures reported in markets with a high percentage of foreign Chinese nationals such as Japan, Korea, Australia, USA and Germany. Alibaba has ambitious plans for the event and chief marketing officer Chris Tung says it can become as big as Christmas for retailers, so brands who want a slice of the action next year should start devising their Singles Day strategy now.
Written by Hannes Ben, EVP international of Forward3D and founder of Locaria.