China's E-Tailers Battle in Run-Up to Singles’ Day

BEIJING, China — The countdown to Singles' Day, the world's biggest shopping frenzy, is almost over. The Chinese shopping festival, which takes place each year on November 11, represents a massive opportunity for global luxury fashion brands to lure China's wealthy consumers into spending eye-watering sums on products and services. For the country's e-commerce players, it is also a time to showcase their prowess, to help brands reach consumers and to generate sales.

In less than a decade, Singles' Day has surpassed Black Friday and Cyber Monday to become the world's most important online shopping event. Last year, retailers and merchants on Alibaba's Tmall and Taobao marketplace amassed $1 billion in sales in the first five minutes, generating total gross sales of $17.8 billion in 24 days — a sum greater than Brazil's total e-commerce sales in 2016.

“No doubt will [Singles’ Day] hit another record in sales this year, as Chinese online giant [Alibaba] has expanded it to a 24-day shopping and entertainment bonanza,” said Andria Cheng, an analyst at data research company eMarketer Retail. “The global marketing hype also will likely translate into record cross-border e-commerce demand.”

No doubt will Singles' Day hit another record in sales this year ... The global marketing hype will likely translate into record cross-border e-commerce demand.

The event has become a key date in China’s retail calendar, even serving as a proxy for the health of the Chinese economy; its evolution in recent years reflects the rapid development of the country’s e-commerce industry and chronicles China's fast-changing consumer culture.

Singles’ Day began as a way for Chinese individuals who were not in a romantic relationship — and therefore somewhat excluded from August Qixi Festival (Chinese Valentine’s Day) — to celebrate themselves. When Alibaba first monetised the event in 2009 as a one-day anti-Valentine’s shopping extravaganza, the concept quickly won over consumers, so much so that, today, the whole population partakes, regardless of relationship status.

Following Alibaba’s success, other e-tailers soon joined the fray. Some, such as Suning and Secoo, directly capitalised on Alibaba’s momentum with their own Singles’ Day shopping events. Major competitor JD.com, however, went one step further, setting up a rival event in 2015: the “681 Anniversary Sale.” (It is worth noting that JD.com’s sales from this year’s 618 Anniversary event totalled $17.6 billion, on par with Alibaba’s 2016 Singles’ Day sales record.)

A Clash of Titans: Alibaba vs JD.com

This year China’s top two e-tailers have upped the ante on their marketing promotion efforts in the lead up to the shopping holiday, putting a strong emphasis on driving fashion and luxury spending. The move is not surprising given the recovery of the country’s luxury sector — Bain & Company expects the Chinese luxury goods market to grow 15 percent in 2017 and continue to flourish for the foreseeable future.

Alibaba and JD.com's focus on luxury fashion also mirrors the e-commerce giants' recent efforts to penetrate the sector. Over the past few months, both players have introduced luxury-shopping platforms — Alibaba launched "Luxury Pavilion" in August, while JD.com debuted "Toplife" in October — and established key partnerships with big brand players.

Alibaba has invested heavily in preparing for this year's event. A pre-recorded, star-studded "see now, buy now" fashion show will air on China's major live-streaming platforms and a number of TV stations on November 10 to kick off Singles' Day. Directed by Hollywood producer David Hill, the second annual fashion show will feature big-name celebrities like Fan Bingbing, Ming Xi and Kris Wu. According to the retailer, mobile viewers will receive purchase links to products they see during the show by shaking their phones, which will allow them to place orders directly, seamlessly fusing retail with social media to create interactive content to engage consumers.

“Alibaba is focusing heavily on the idea of ‘retail-tainment’ this year for Singles’ Day as it has been increasing its investment in entertainment-related platforms,” said Liz Flora, editor of Asia-Pacific research at New York-based digital intelligence firm L2. “These include its own live-streaming platform and Youku, which also aired Tmall’s Singles’ Day runway show with links to purchase. Through partnerships with social and entertainment sites, the e-tailer can not only collect data on purchase habits, but combine that information with data on users’ other preferences such as favourite TV shows in order to perform targeted advertising.”

Marking the one-year anniversary of Alibaba’s “New Retail” initiative, the Singles’ Day promotion goes far beyond show business and social media, with the company employing new technologies to facilitate a smooth online to offline shopping experience. For example, there are several augmented-reality games on Taobao and Tmall to encourage consumers to collect promotional coupons.

Alibaba is the clear Singles' Day winner. It has triggered competitive companies and peers to change their business models and re-evaluate their approach to online sales promotions.

Participating brands on Alibaba's platforms this year include Nike, Lululemon, Gap, Mac Cosmetics, Rimowa, Ralph Lauren, Estée Lauder, Furla and Victoria's Secret, to name but a few. Alibaba's recent partnership with New York Fashion Week has also seen a number of US designers introduced to its platforms, namely Opening Ceremony, Robert Geller and Jason Wu.

“Alibaba is the clear Singles’ Day winner,” said Brendan Ahern, chief investment officer at Krane Shares. “It has triggered competitive companies and peers to change their business models and re-evaluate their approach to online sales promotions.”

However, Alibaba’s dominant position is not unchallenged, with rival JD.com posing the biggest threat. Although traditionally a go-to for electronic goods, this year’s JD.com Singles’ Day shopping event will focus heavily on fashion.

JD.com has been forging partnerships with other tech giants — such as Tencent, Baidu and NetEase — to help build up its own online ecosystem. In late October, it announced its “Boundary-less Marketing” strategy, which will see the company provide retailers and merchants with a wide range of marketing and promotion assistance in the lead-up to the holiday.

Arguably the most significant is JD.com’s collaboration with Tencent, which gives the retailer access to China’s biggest social media network WeChat. The two companies will develop a secure catalog of data that allows brands to better understand the shopping preferences of over 900 million WeChat users and target them strategically and precisely.

Consumers also benefit from JD.com's relationships with physical stores, which gives them access to sales promotions, coupons and discounts that they can utilise on and off-line. According to a Chinese media report, JD.com users will receive WeChat notifications when they are close to brick-and-mortar locations that are participating in the festival. Interested shoppers can visit the stores to buy products, or place the orders on JD.com. They can also share their orders on WeChat with friends to receive coupons.

L2’s Flora said JD.com’s alliance with WeChat makes it a strong rival against Alibaba. Along with JD.com’s previous efforts to partner with British luxury e-tailer Farfetch, L2’s research has found that recently the e-commerce company has been gaining luxury market share from Alibaba’s Tmall.

Niche Players Capitalise on Singles’ Day Momentum

Besides Alibaba and JD.com, there are a number of other luxury e-commerce players in China joining the battlefield. Secoo — the pure luxury site that went public on the US stock exchange this September — is taking part in Singles’ Day for a second time this year. Its promotions started on November 1, and will continue until November 11, offering shoppers new discounts and offers each day. However, the site is only running small-scale promotions on its official Weibo and WeChat accounts.

Popular flash-sale e-tailers like Alibaba-backed Mei.com and Vipshop promote their Singles’ Day activities through Baidu Tuiguang, a service similar to Google Adwords. Farfetch’s Chinese site has also released special editorial content to welcome Singles’ Day.

Still, some long-time industry players, including Shangpin, Net-A-Porter China and Yoox China, have shown no sign of Singles’ Day-related promotion in the run up to this year's shopping festival.

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