Learning from Double 11 Shopping Festival about ...

The Double 11 shopping festival, as the largest and most popular annual global shopping festival in the world – now overshadowing Black ... × Topics Economy&trade Tax&Accounting Legal&regulatory Industries HR&Payroll Technology Features CitiesSpotlight COVID-19Insights Opinion FeaturedEvents May24 USTimeZone-HowtoCombatRisingBusinessCostsinChina:BestPracticesSharing May31 TrainingProgramonIPProtectionThroughCustoms CounterstrategiesforRisingBusinessCostsinChina:BestPracticesSharing ManagingIPProtectionWhenSellingtoChinaviaCross-BorderE-Commerce UpcomingEvents OnDemandlibrary ReportsandPublications HumanResourcesandPayrollinChina2022 HowChinaisReformingitsSoe'stoBecomeMixedHybridGlobalBusinessesWorthTensofBillionsofDollars LatestVideo&Podcasts HowYourDomicileDefinesIndividualIncomeTaxTreatmentinChinaandtheUK PermanentEstablishmentandEmployingPeopleinChinaandtheUKSeries AboutChinaBriefing Aboutus AsiaBriefing OurPartners OurTeam MediaKit Contact Other Briefings AsiaBriefing ASEANBriefing ChinaBriefing IndiaBriefing SilkRoadBriefing VietnamBriefing RussiaBriefing AsiaInvestmentResearch MiddleEastBriefing EN EN FR DE IT RU ES CN PT SUBSCRIBE Topics LearningfromChina’sDouble11ShoppingFestival:Marketing,Retail,ConsumptionTrends LearningfromChina’sDouble11ShoppingFestival:Marketing,Retail,ConsumptionTrends November26,2021PostedbyChinaBriefing Writtenby SofiaBrooke ReadingTime: 6minutes China’srisingconsumerpowerplaysanimportantpartinthecountry’sdualcirculationstrategyandisanengineofglobalgrowthinmanycategories.TheDouble11shoppingfestival,asthelargestandmostpopularannualglobalshoppingfestivalintheworld–nowovershadowingBlackFridayandCyberMondaycombined–servesasawindowtoobserveChina’slatestconsumertrends. Thisyear,theChineseannualshoppingfestivalbeganonOctober20,2021at8pm.ItwasfirstlaunchedbytheAlibabaGroupHoldingLtd.in2009aroundtheunofficialNovember11holidaythatcelebratedsinglepeople.Sincethen,thecommercialactivityaroundthecelebrationhasexpandedfromonedaytothreeweeksandextendedfromAlibaba’sTaobaoandTmallmarketplacestothewholeretailsector. RetailersandbrandsnowtapintosocialfeaturesonsocialmediaplatformsandembracelivestreamingsessionsbesidesomnichannelmarketingcampaignstoincreasetheirsalesintheChinesemarket,particularlyasnewentrantsbolstercompetitionduringperiodsliketheDouble11shoppingfestival.Inthisarticle,we’llwalkyouthroughtheemergingnewtrends. NewmarketingandretailtrendsfromChina’sDouble11shoppingfestivalin2021 Thisyear’sDouble11shoppingfestivaldidnotfeature“battlereports”,whichtypicallyshownewrecordscreatedbytheminutesashasbeendoneforaroundadecade. 45minutesaftermidnightonThursdayNovember11th,atotal382brandsonAlibaba’splatformTmallhadsalesexceedingUS$15.6million.ThebrandsincludeddomesticbrandslikeHuaweiandErkeandinternationalbrandslikeL’OréalandApple.Upfromlastyear’snearlyUS$78billion,Tmall’stotaltransactionvolumereachedhitUS$84billion. Asof2am,Xiaomi’stotalsalesduringthefestivalhadexceededUS$2million. JD.comreportedanewrecord,withearningsofUS$54billion. Earlierpresaleperiod Thisyear,presaleswereearlier.Inthepast,theDouble11presalesbeganatmidnight.Consumerswouldpullall-nighterstoplaceorders.However,thisyear,TmallandJD.com’spresalesbeganhoursearlierat8pmonOctober20th. Besidesthepresalesperiod,Alibabarunstwosalesperiods,apracticethecompanydebutedlastyear.JD.com’sDouble11salesbeganat8pmonOctober31st,withafinal“price-off”occurringat8pmonNovember10th. Extendingsalesmeante-commercecompaniesboostedthevalueofgoodsandeasedpressureonlogisticsnetworksandmerchants. Newplatformfeatures Short-videooperatorsByteDanceLtd.andKuaishouTechnologyhavealsostartedshoppingeventsontheirplatforms.Bothplatformslivestreame-commerce.Streamersusetheirconnectionsandcredibilitywithaudiencestorecommendproducts,withdiscountsexclusivetothestreamattimes. Theseplatformshavehundredsofmillionsofdailyvisitors.InAugust2020,ByteDance’sDouyinreached600milliondailyactiveuserswhileKuaishoureached293millionactivedailyusersinthesecondquarterin2021.Theseplatformsalsohavespecialfeaturessuchascontentrecommendationalgorithmsthatcontributetosalesfigures. InJune2020,ByteDancecreateditsowne-commercedepartmentandparticipatedintheDouble11shoppingfestivalthatyearinsteadofactingasjustanadvertisingplatformforotherplatforms.DouyinrecordedfinalsalesofUS$2.9billion. OnOctober1thisyear,Alibabareleasedanewfeaturecalled“ZhongcaoMachine”,whichallowsshopperstosearchthroughreviewsfromotherusers.Ittranslatesto“plantinggrass”–referringtotheideaofplantinganideatopurchasegoodsinaconsumer’smind. Guochaotrend Thenotionofguochao–thedesiretobuyChineseservicesandgoodsandconnectwithlocalproducersandroots–hasbecomepopularmuchtothebenefitofChinesecompaniesandlikelyinresponsetotheirgreatercompetitivegoodsandserviceofferingsinrecentyears.Whilethetrendmayhavebeenstrengthenedbynationalistbacklashesagainstforeignproducts,ithasbeensometimesincebrandpreferencesinChinashiftedfromforeigntodomesticcompanies. Arecentsurveyconductedof5,000respondentsfrom15citiesfoundthatthenumberofthosewhowouldbuyalocalbrandoveraforeignbrandincreasedfrom15percentto85percentfrom2011to2020.Theshiftsinpreferencehasledtotheemergenceoflargelocalplayersinsomecategories. Overthelastdecade,localChinesebrandshavecapturedmostofthemarketinhouseholdpackagedgoodsandelectronics.Inthesecategories,manyChinesebrandsholdmarketsharesofmorethan50percent. Historically,foreignplayershavehadthelargestmarketshareinthebeautyandautomotiveindustryinChina.ChinesepremiumautomotivebrandsnowaccountforsixpercentofthemarketwhileelectricvehiclesaccountforalmosttheentiremarketinChina. Theguochaotrendhasbeenmostnoticedinapparelandfootwear,withlocalapparelbrandsgainingthreepercentagepointsmarketsharebetween2015and2020.However,footwearandsportsweardroppedbetweenfiveand10percentinthesameperiod.Despitethis,someChinesecompanieshaveshownstronggrowth.SportswearcompanyAntaGroupincreaseditssalesapproximatelythreefoldinthisperiodwhileLi-Ninggrewitssalesby85percent.Someglobalbrandsalsosawdeclinesinearly2021. Clearly,thepreferenceshiftsarethusrespondingtomorethanjust‘buyinglocal’butamixoffactorslikequalityexpectations,markettrends,pricerange,andperceptionamongtargetconsumerbands,etc. Forexample,ChinesedomesticskincareandmakeupproductshavebeenabletochallengeglobalcounterpartsthroughabetterunderstandingofChineseconsumers,R&Dcapabilities,andbetteronlinechannelsforsales.TheindustryhasalsoreceivedsupportfromthegovernmentandtheMinistryofIndustryandInformationTechnology(MIIT),withpromisesbeingmadetoteamupwithotheragenciestoofferthecosmeticsindustryinnovationandfundingsupport. AccordingtoShanghaiShenyinWangouResearch&ConsultingCo.Ltd.,thoughforeigncosmeticbrandledinpresalefigures,domesticbrandsWinonaandProyaCosmeticCo.Ltd.rankednumber5and10,respectively,duringthefirsttwodaysofpresaleintheDouble11festival.Inthefirsthourofpresales,WinonaachievedsalesofUS$109million.Thissurpasseditsrecordforthewholefestivalperiodlastyear.SportsbrandslikeErke,MobiGarden,andWarriorandappliancebrandlikeTinecoandNarwalsurpassedsalesfigurerecordsfortheentiredaywithinthefirsthourofsales. Walledgardensapproachbanned Ithasbeenacommonpracticeforyearsforthelargesttechcompaniestoblockrivals’linksontheirapps.Thisisknownasthe“walledgardens”approachandcanprotectacompany’sdigitalecosystem,discourageconsumersfromspendingmoneyelsewhere,andreducetheircompetitor’sgrowth.Thisyear’sDouble11shoppingfestivalsawamajorchangeasthiswalledgardensapproachwasbannedbygovernmentdirectivetoavoidmonopoliesanduncompetitivepractices. Previously,awalledgardensstrategymeantthatlinksfromDouyinandFeishu(aworkplacetool)couldnotbeopenedeasilyonTencentHoldingsLtd’sWeChatplatform.LinksforwardedfromTaobaoandTmallcouldnotbeopeneddirectlyintheappeither.Tencentclaimedthispracticewasforsecurityconcerns.Thesepracticesledtolegalissuesandcomplaintsfromusers. Othercompaniesimplementedsimilarrestrictions.AlibabadidnotallowshopperstouseTencent’sWeChatPaysystemforyears.Douyinalsobannedthird-partywebsitelinksonlivestreamingchannelsduringthe2020Double11festival. However,thesepracticesarenoweffectivelybanned.OnJuly26,thisyear,theMIITdetailedasix-monthcampaigntocleanuptheinternetindustry,andblockingexternallinkswasoneofeighttypesofactivitiestargeted.OnAugust17,theStateAdministrationforMarketRegulation(SAMR)releaseddraftguidelinestoregulateanti-competitivemeasuresintheindustry,barringlinkblockingoncemore.OnSeptember15,thecybersecuritywatchdogreleasedguidelinesthatrequiredplatformstocooperateontrafficanddatainlinewithnationalrules. Tencent,ByteDance,andAlibabaallexpressedsupportforthenewrules.OnSeptember17,TencentallowedWeChatuserstoshareexternallinksinprivatechats.OnOctober27,Alibaba’sChiefMarketingOfficerChristTungconfirmedWeChatPaycouldbenowusedtomakepurchasesontheirapps.UserscanalsosharetheirAlibabashoppingcartstoWeChatgroupchatsand“Moments”feeds. Polishinguptheirimage DuringthisDouble11festival,somecompaniestriedtopromotepublicwelfareandgreenconsumption.Theeffortscomeatthebackdropofgovernmentcallsdemandingthetechsectortocontributemoretowards“commonprosperity”andseveralauthoritiesintroducingplanstomeetChina’scarbonreductiongoals. OnTmall,US$15millionworthofgreenvouchersweregivenouttoencourageconsumerstobuygreencertificationandenergy-efficientproducts.Atthesametime,Alibaba’slogisticsdepartmentintroduced60,000packagerecyclingpointsacross20cities.JD.comsaiditisrecyclingandreducingpackaging,andmakingdeliveriesusingelectricvehicles.TheseinitiativescomeasnosurpriseduetosustainableconsumptionbecomingpopularinChina.InasurveyconductedbyPwc,72%ofrespondentsinChinasaidtheybuyfromcompanieswhicharecommittedtoprotectingtheenvironment. Alibabaalsolaunchedphilanthropycampaigns.Forexample,theirRMB1donationforsocialmediapostsmentioningthe“GoodsforGood”program.Aninitiativefrom2006,donationsfromtheprogrambenefitolderpeoplelivingalone,low-incomeworkers,and“left-behindchildren”ofmigrantworkers. ThefutureofconsumptioninChinaisbright ChinacontributesalargeamounttoglobalconsumptionbutMcKinseyreportsthereis‘roomtogrow’.China’shouseholdconsumptionisapproximately38percentofitsGDP.Incomparison,thewholeofAsia-Pacific’sconsumptionis50percentofitsGDP,theEuropeanUnion’sis52percent,andtheUnitedStates’is68percent.McKinseyreportsthatamorecomplexfinancialsystemandnewpolicydirectionsmaysteercustomerstowardsdiscretionaryspendingorfinancialassets. AsChinacontinuestourbanize,citiesremainthedrivingforceofChina’sgrowth.Approximately80percentoffutureconsumptiongrowthisexpectedtohappenincities.ConsumptioninChinaisdrivenbyits30largestcities.Consumersinthesecitieshavelargeamountsofpurchasingpower,spendingmoreonapercapitabasisthantheaveragenationalspend.Thesecitieshavehadlargerserviceoffersandretailopportunities,historically.However,newhotspotsofconsumptionareemergingincitiesoutsidethetop30,suchasGuiyang,andreportinghigherhouseholdconsumption.Manycompaniesareanticipatingthisnextwaveofgrowthandareexpandingtheirreachintocitieswhereincomesarerising.   Sharethis:ClicktoshareonFacebook(Opensinnewwindow)ClicktoshareonLinkedIn(Opensinnewwindow)ClicktoshareonTwitter(Opensinnewwindow)ClicktoshareonReddit(Opensinnewwindow)Clicktoemailalinktoafriend(Opensinnewwindow)Clicktoprint(Opensinnewwindow) ChinaBriefingiswrittenandproducedby DezanShira&Associates.ThepracticeassistsforeigninvestorsintoChinaandhasdonesosince1992throughofficesinBeijing,Tianjin,Dalian,Qingdao,Shanghai,Hangzhou,Ningbo,Suzhou,Guangzhou,Dongguan,Zhongshan,Shenzhen,andHongKong.PleasecontactthefirmforassistanceinChinaat [email protected]. 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