Can Double 11 meet high expectations for growth amid a struggling retail environment?
Double 11, also known as Single’s Day or 11.11, is the world’s largest retail event, held each year on November 11th. Recognizing the commercial appeal of Valentine’s Day, Alibaba Group co-founder Jack Ma realized an opportunity to capitalize on the exact opposite, giving single people the same chance to celebrate and treat themselves. Alibaba went on to launch their first 11.11 online shopping festival in 2009.
The world’s largest retail event, 11.11 eclipses equivalents including Black Friday and Cyber Monday. Its success has been staggering: the 24-hour festival has in the past pulled in results 8x larger than Black Friday’s online sales and greater than twice the size of Amazon’s monthly gross merchandise value (GMV) (Bain). 2019 was the largest Double 11 event to date, with GMV across Alibaba’s shopping platforms reaching 268.4 billion yuan ($38.3 billion USD) all within one single day – a 26% increase from the previous year (Forbes).
Yet with the COVID-19 pandemic having heavily affected the retail sector this year, all eyes will be on Double 11. Can the festival continue to sustain the levels of growth we have seen over the past 5 years? Will the day bring respite to retail brands who have struggled through the challenges of 2020? In this article, we discuss the factors that will influence the success of 11.11 this year.
Achieving growth in the midst of a pandemic
Double 11 has experienced remarkable sustained growth since its inception, growing by a 35% compound annual growth rate over the past 5 years (Bain). Yet in 2020, there are questions as to whether the festival will be able to experience the same levels of growth we have seen in the past, with penetration close to reaching saturation in China’s top-tier cities and constrained spending amongst consumers as a result of the economic fallout from the COVID-19 pandemic.
Yet Alibaba are clearly expecting to see continued success in this year’s festival. The group’s logistics arm, Cainiao, have prepared to charter approximately 700 flights to deliver purchases from the festival, and quickly too – more than 50% of this year’s cross-border packages are expected to be delivered twice as fast as their usual speed. Retail brands across the globe will be paying keen attention to the outcomes of Double 11 this year, which will likely be used by many to predict shopper appetite in a market which is beginning to emerge into the recovery phase post-COVID.
A renewed format and early signs of success
Perhaps in response to concerns around the potential success of Double 11 in the wake of a challenging year, Alibaba announced a two-phased approach to the shopping festival in 2020 – a first phase beginning on November 1st and the second 24-hour event on November 11. The addition of a ‘pre-event’ shopping period, which will focus on new brands, new products and global exclusive items, will promote both incremental growth for brands as well as allowing retailers to double-down on their investment and, hopefully, their return.
We have already seen promising shoots of success from the early sales period. In just over 100 minutes from the sale kicking off at midnight on November 1, more than 100 brands achieved sales exceeding RMB 100 million (about $15 million USD) in gross merchandise value (Campaign). In addition, Alibaba’s TMall Global, who held their first day of presales on October 21st, experienced a 90% YoY uplift compared to their first day of presales last year (Campaign). There is clearly appetite from consumers – perhaps driven by an increased desire to shop sales and discounts as the result of a global economic contraction – and it appears that brands are taking advantage of the ability to hedge their bets over a longer period to maximize their chances of realizing success.
Increased participation from the luxury sector
Luxury retail is a major focus in this year’s 11.11 shopping festival, with more than 200 luxury brands taking part – representing a doubling of luxury brand participation year on year. Premium brands including Balenciaga, Prada and Valentino have all began running their Double 11 campaigns on Tmall, and we are seeing luxury participation spanning cosmetics, accessories and apparel. In past years, luxury brands tended to only align their cosmetics lines with the event or avoid it completely.
While there is increased participation this year, luxury brands are focusing more towards exclusive items and gifts with purchase, with most brands steering away from offering discounts or coupons. High-end jewelry retailer Cartier hosted their first-ever livestream in the first phase of the event, attracting 770,000 viewers over the two-hour time period in which the brand showcased more than 400 pieces of jewelry and watches including a necklace priced at $28.3M (Campaign). Through this approach, the luxury sector can tap into the excitement and cultural relevance of 11.11 while still maintaining their exclusivity and approach to pricing.
Double 11 goes global
As the 11.11 shopping festival reaches saturation within China, it is also being adopted by brands and retailers internationally. The festival is becoming a significant event throughout Southeast Asia, with major marketplaces including Lazada, Zalora and Shopee taking part, while global retailers including UK-headquartered luxury marketplace Net-A-Porter and US retailer Revolve are also offering their own discounts. The event has also spawned multiple lookalikes in other regions, such as 12.12, which in Indonesia has overtaken 11.11 to become the country’s largest retail event.
The festival also proves value for international brands looking to enter the Chinese market. In 2020, Alibaba’s international arm, Tmall Global, is aiming to introduce over 2,600 new international brands to Chinese consumers for the first time. Similarly, cross-border e-commerce platform Kaola – which Alibaba is touting as their answer to Costco online – will also join the shopping festival for the first time, featuring products from over 80 different countries and regions. Double 11 offers international brands the chance to build awareness and engagement amongst the highly valuable Chinese consumers.
Livestream reigns king of content
Content format will be another key factor for brands to pay attention to in this year’s Double 11 shopping festival. Livestream content is set to dominate this year, with the format having grown steadily in popularity amongst ecommerce brands throughout 2020 as brands turned to new retail formats during lockdown. Livestream videos will be hosted throughout the festival by everyone from top livestreaming Key Opinion Leaders to company executives and local celebrities.
Alibaba will be hosting livestreams on their Taobao Live platform to sell everything from electronics to houses. Livestream video offers a unique and engaging way for brands to interact with their customers while providing detailed information about the products on offer, which acts as a valuable alternative to personal sales assistance in a year when consumers have not been shopping in-store. Livestream shopping also drives excitement and urgency and is expected to bolster sales growth on 11.11
As we wait eagerly to see the results from Double 11 2020, it’s clear that the event is growing in importance for brands and retailers across the globe.
At Tag, we work with retail brands to create shopper marketing campaigns that stand out. With our global team of online and physical retail experts, we work with a consumer-led, data-driven approach to maximize the value of every marketing dollar. We work with brands and agencies to build impactful seasonal campaigns and specialize in the design and sourcing of gifts with purchase to support campaign messaging.
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