11 Years of 11.11: Brands Gear Up for Tmall 2.0

11-11

11 Years of 11.11

Brands Gear Up for Tmall 2.0

Mindshare

Shanghai | November 6th, 2019 - Next week, Alibaba’s antidote shopping festival to Valentine’s Day - 11.11 or Single’s Day – turns 11. Driven through the latest in technology, retail, social and influencers, the day has come to redefine eCommerce, as well as the might of China’s domestic market.

Originally starting out with just 27 merchants back in 2009, the event has now grown to include over 200,000 brands, one million new products and an estimated 500 million shoppers on Alibaba’s Tmall. If predictions hold true, that’s 100 million new shoppers on last year looking to take advantage of the $7.15 billion USD (50 billion RMB) in promotional and coupon savings. Last year, the event was responsible for selling $30.8 billion USD in gross merchandise volume, far surpassing online revenues from Black Friday, Thanksgiving, Boxing Day and Cyber Monday combined.

While the opportunities for brands couldn’t be bigger on the event’s 11th birthday, marketing during the incredibly saturated festival is becoming invariably more challenging.

Pre-sales dominate on a more immersive Tmall 2.0

In anticipation of large pre-sales this year, thousands of merchants have upgraded to Tmall 2.0 - previously only available for mass brands - which offers them the ability to customize their flagship stores, using a suite of new tools and features to engage with customers through rich, personalized content and promotions, as well as an omnichannel experience.

Tmall 2.0’s new features have enabled brands to witness explosive sales ahead of the actual event, with Lancôme, L’Oréal Paris, Shiseido, Helena Rubinstein, OLAY, Estee Lauder and The History of Whoo all surpassing $14 million USD in sales within the first ten minutes of pre-sales.

Beyond driving presales, memberships on Tmall have become increasingly important this year, offering brands a way to own their relationships with consumers by turning ‘public traffic’ into ‘private traffic’, allowing them to more effectively and cost-efficiently re-target and retain them.

KOLs (Key Opinion Leaders) Shift Consumer Focus

China’s rise in user-generated content has fueled the influence of KOLs in China’s online retail world, whether on Douyin (TikTok), XiaoHongShu (Little Red Book), or Taobao. On the first day of pre-sales this year, sales generated by livestreaming grew 15 times. Helping to shift consumer focus from “What do I want to buy?” to “What should I be buying?”, KOLs are responsible for this exponential rise. With Chinese consumers placing greater emphasis on trusted peer reviews, it is unsurprising that KOL’s word-of-mouth effect in China has shown to be twice as strong as that of paid ads, with a 37% on average higher retention rate than without KOLs.

One of this year’s greatest pre-sales success stories belongs to Li Jiaqi, known fondly in China as the Lipstick King. On the first day of this year’s presales, he attracted over 31 million viewers during his livestream, selling a record-breaking 100 million RMB worth of products within six minutes, with each of his featured 39 products selling out within five minutes.

Yet KOCs (Key Opinion Consumers) Have the Final Say

First emerging in 2019, KOCs are the latest wave of influencers to dominate China’s eCommerce world. As many celebrity influencers have fallen out of favor with Chinese netizens who are all too aware of their lucrative brand deals, they have instead started placing greater trust in key consumers who have made a trustworthy and reliable name for themselves reviewing products. Most recently, Perfect Diary centered its entire marketing plan around KOCs, becoming one of China’s most talked about beauty brands in 2019. While KOLs will certainly be helping to shift consumer focus as this year’s 11.11 heats up, KOCs will have the final word, building or breaking brands in the process.

She-economy and Lower-Tier Consumers Drive the Buying Frenzy

While China’s economic growth has decelerated in recent years owing to global and domestic headwinds, as well as a trade war with the USA, the ‘She-economy’ continues to grow. Accounting for 55% of China’s eCommerce sales last year, female shoppers are clear in their eCommerce preferences and plans. According to Chinese Advocacy Marketing Platform, PJdaren, 99% of females plan to shop during this year’s festival, with 40% planning to spend more than 3,000 RMB ($430 USD). Females in lower-tier cities have shown an even higher propensity to spend, with 77% of them expecting to spend more than 1,000 RMB or more during the shopping feast, compared with 70% in tier 1 and tier 2 cities.

For the first time this year, Alibaba held a concurrent kick-off event in China’s north-eastern city of Harbin, demonstrating its commitment to lower-tier cities that have contributed to 70% of Alibaba’s new annual active customers. In addition, Alibaba have re-positioned Juhuasuan, placing greater strategic focus on its daily deals site targeted to lower-tier consumers. Competing with this is JD’s newly launched Jingxi platform and Pin Duo Duo, China’s original eCommerce platform to focus on lower-tier cities.

Commenting on the pivot, Alibaba Group’s CMO, Chris Tung, said: “The success of our focus on less-developed markets in China is reflected in our new customer acquisition growth. We are equally driven to help local enterprises and factories digitize, which improves their operational efficiency and ability to engage with customers across the country.”

Niche Categories a Key Focus

Simultaneously, this year has seen Tmall focusing on nine booming, albeit niche, categories, including Oral Care, Men’s Care, Hair Care, Baby Care and Pet Care. This is due in large part to post-90s consumers’ interest in sophisticated and trendy retail subcategories, with this generation making up 55% of Tmall’s International userbase.

Overseas Brands Take Center-Stage

Of the 200,000 brands participating this 11.11, an estimated 22,000 international brands are taking part, representing 300% YOY growth. Earlier in September, Rhianna’s Fenty Beauty became the first LVMH beauty brand to enter China via Tmall International. Thanks in part to Alibaba’s acquisition of NetEase Koala – a leading cross-border e-Commerce platform - overseas brands will continue to accelerate their presence.

Retail Entertainment Drives Success

As China’s middle class continues to grow – estimated to be 550 million within the next three years – they are becomingly increasingly sophisticated. Looking beyond flashy discounts, their demands for entertaining retail experiences coupled with great prices have increased. With a strong focus on entertainment, 11.11 has grown to become about far more than shopping. Today, it is an interactive media and entertainment channel in its own right. As Joe Tsai, co-founder of Alibaba, famously said: “Retail is the new entertainment” and this couldn’t hold truer than in 2019. With Taylor Swift confirmed as the opening act, this year’s 11.11 Countdown Gala is set to feature a number of local and international superstars, including Li Ronghao, Hua Chenyu and Kana Hanazawa, all in a bid to attract more consumers and push the sales records of the world’s largest shopping festival.

By Linda Qin, Senior Executive, Digital Performance Strategy, Mindshare China; Allison Zhang, Management Trainee, Digital Performance Strategy, Mindshare China; and Nicholas Short, Marketing Lead, Mindshare China.

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