In this blog, we will examine the underlying digital strategies that contribute to the success of Singles’ Day sales and the future of retail.
Singles’ Day has surpassed Black Friday and Cyber Monday by almost four times in sales revenue, as we see the year-on-year exponential growth. Brands can spend six to eight months planning their Singles’ Day activity, where the day could account for up to 25% of their annual sales. The sheer scale of sales highlights the pressing need for retailers to pay heed to a sales strategy involving Chinese markets.
So, what can retailers take away from the success of Singles’ Day?
- Offline to Online (O2O) conversions:
Alibaba has focused heavily in the last two years on pioneering the concept of O2O (offline to online) through their new retail strategy, which aims to accelerate the digital transformation of offline. Despite the demise of brick-and-mortar stores in the west, this has caused an uptake of brick-and-mortar store deals in China.
Through focusing on retail innovation and leveraging technology, Alibaba has partnered with major global brands to digitize traditional stores. Allowing customers to browse goods at retail stores is a good strategy to enable O2O sales, as many Alibaba shoppers browsing in stores will complete their purchases through the online platform contributing to the Singles’ Day sales total.
Merging O2O further, Alibaba is leading the way in the future of retail by beating Amazon to cashless stores. At Hema (Alibaba’s chain of supermarket stores), pricing is WiFi-connected and can be changed digitally over e-ink price tags. Payment can be carried out simply with a smile, due to facial recognition technology that Alipay (Alibaba’s mobile and online payment platform) implemented on their checkout kiosks.
The concept of O2O has been piloted for Singles’ Day as part of a T-mall (Alibaba’s B2C online retail platform), where an entire shopping area is kitted out in smart mirrors, virtual fitting rooms, and smart purchase machines. These machines place their own orders while synchronizing the order with the T-mall web shop. This also serves as a smart inventory tool that highlights popular products that will require more stock. The goal here is for customers to be able to try out new products online.
- Creating a one stop service platform
As part of the New Retail strategy, Alibaba has rolled out Single’s Day food and drink delivery promotions to 11 cities in China, partnering with Starbucks and Ele.me to help boost online orders. This partnership will allow Starbucks to leverage Alibaba’s digital capabilities to create an online store.
The existing logistics infrastructure from Hema stores is well positioned to support the fulfilment delivery process. This is a prime example of leveraging existing assets to support growth in a new market. Furthermore, the partnership with Starbucks has opened up new in store advertising channels for Singles’ Day, as customers shopping in physical stores will receive exclusive promotions for a brand or retailers online offers.
Hema is a prime example of how in-store services can be seamlessly integrated with digital channels. Customers can order groceries online for delivery in less than 30 minutes, and in store customers can also shop and pay using their smartphones. By creating a strategy that touches all aspects of consumer lives, Alibaba has embedded its e-commerce platform T-mall with physical stores creating a one stop service platform to drive sales by catering to changing customer lifestyles and providing convenience as a service.
- Leveraging big data
Retailers must take advantage of the troves of data generated on their search platforms. This is exactly what Alibaba has done through its T-mall Innovation Center, by identifying what Chinese consumers are searching for through platforms but are unable to find. These insights can then be shared with consumer products companies to accelerate the creation and testing of new products.
The Spicy Snickers bar invention was a key example of how combining data from Alibaba’s platforms and Mars’ in-house consumer research can generate insights that guide innovation. Researchers were able to establish a correlation that consumers who often bought a lot of chocolate, also enjoyed spicy snacks. This insight led to the development of a Spicy Snickers bar, that combines a traditional Snickers bar with local Sichuan peppercorns. The success of this innovation is reflected in sales which have surpassed RMB 9 million ($1.43 million) since its launch between August 2017 to March 2018.
This has put Alibaba in a prime position to smash Singles’ Day sales once again by leveraging its goldmine of consumer insights to help optimize brand sales and marketing, and overall improve the content that is delivered to the consumers.
- The power of technology with consumers
Technology has certainly changed the shopping experience for consumers, while raising expectations to new heights. Retailers must pay close attention to the end-to-end service being offered to consumers, by ensuring that an efficient logistics capability is in place for e-commerce. This often means meeting consumer expectations of time-framed online orders or ensuring that the online experience from search to checkout runs smoothly. For Singles’ Day, this meant processing over 800 million orders within 24 hours for delivery within China in 2017. This highlights the careful planning and technological infrastructure considerations that were needed to ensure a seamless experience for all customers.
In summary, technology has improved customer experience for Singles’ Day through enabling a seamless O2O experience by merging digital and physical shopping experiences. This is underpinned by fast digital payment methods, using big data to deliver products that customers want and combined with an integrated logistics system to ensure customers receive their orders in an efficient manner.