- 25/11/2016
- Category: Commentaries
In 1993, student at Nanjing University celebrated Singles’ Day, an appreciation for everyone who is single and is not in a relationship. The students choose November 11 (11/11), a quadruple single number to represent their loneliness. Unlike its mellow tones, Singles’ Day was never meant to be about pitying yourself. Two decades after it was founded, Singles’ Day is transforming into a juggernaut of personal consumption. Vis-a-vis with its Valentine Day counterpart, Singles’ Day is now celebrated as a shopping feast. Alibaba, one of the e-commerce giants in the world, is clever to turn this somber affair into the most successful shopping event in the world.
In just 24 hours, Alibaba made a total of $14.3 billion this year and generated $5 billion in 90 minutes of their sales. Since 2013, Alibaba’s Singles’ Day sale beat two biggest shopping events in US, Black Friday and Cyber Monday. Alibaba initiated their first Singles’ Day event in 2009 with the main idea to promote its Taobo Store, the Chinese equivalent of eBay. The online marketplace offers customers discounts of at least 50%. Alibaba generated sales of 50 million yuan (~$7 million) that year and the number keeps increasing exponentially in the next following years.
Besides creating new shopping feast from ‘fictional’ celebration, there are two things that we could learn from Alibaba’s success in Singles’ Day. First, Alibaba manages to secure both floor and ceiling prices by taking advantage of the government regulations. On the floor level, Alibaba’s marketplace platform, Taobao and Tmall.com, only accept merchants if they are willing to discount their items for at least 50% of the original price. On the ceiling level, China’s State Administration for Industry and Commerce (SAIC) makes sure that products sold on the event would meet several requirements. These requirements are; to forbid raising prices before applying discount, claiming to be out of stock, changing orders or canceling sales; and to use superlatives terms such as “the lowest price on the web” on the advertisement campaign. SAIC regulations on Singles’ Day event protect consumers from misleading price and information while at the same time secure the quality of Alibaba’s merchants and mega discount policy.
Both strategies on securing floor and ceiling prices are proven to be effective to rack up the profit and are highly replicable in developing world. Assuming that the majority of developing countries have less regulations on online marketplace, especially the ones related to discount and pricing, e-commerce industry in these countries could replicate what Alibaba did in China’s market. They can start to put minimum cap on discount while at the same time utilize existing government’s regulations related to ceiling price and consumer protection. On the other hand, Alibaba’s strategy might find numerous challenges in the developed world. Just like what Marshall Meyer (Wharton’s emeritus professor of management) said, it is impossible to imagine Amazon.com telling its merchants that they are only allowed to put products in the marketplace if they give 50% discount. Plus, the government already made raising prices ahead of offering discounts on Cyber Monday illegal. Amazon retailers would report this to authorities.
Secondly, e-commerce industry could learn from Alibaba’s creativity and marketing strategy in Singles’ Day. Besides inviting big star like Kobe Bryant to join the shopping event and putting 24-hour commercials on TV, there is another feasible marketing strategy that other e-commerce industry could take note from. This marketing strategy is utilizing social network and smartphone games. In the context of social network, Alibaba was utilizing WeChat, the biggest social texting app in China, to market their products. Customer could make purchases using the app with its Weixin payments (WeChat currency). Instead of using mainstream social media platforms like Facebook or Twitter, Alibaba attempted to increase their sales by altering social texting app into a marketplace.
On smartphone games, Alibaba utilized virtual reality (VR) experiences and augmented reality games to keep shoppers’ thumbs and eyeballs glued to the ‘buy’ button. In VR experience, customer will enter one of the store scenes such as Macy’s in New York City. Customer could explore the store and find moving blue dots. The blue dots indicate the products customer could buy. In order to support this plan, the company sold cardboard VR sets for only 15 cents in the weeks prior to singles’ days. Customers need these VR sets in order to taste this experience. On the augmented reality side, Alibaba created an augmented reality smartphone game. In this game, customers have to chase Alibaba’s cat mascot to find discounts and coupons that can be redeemed for products deals. This game is also connected to pre-show and 24-hour online where customer will be rewarded if they shake their phones at certain points.
References
Berke, J., ‘How Alibaba turned an obscure, made-up Chinese holiday into a $14.3 billion shopping extravaganza that’s bigger than Black Friday,’ businessinsider.co.id (online), 14th November 2016, , 20th November 2016.
Custer, C., ‘China’s government to Alibaba, JD, etc.: no misleading customers this Singles Day’, Techinasia.com (online), 4th November 2016, < https://www.techinasia.com/chinas-government-alibaba-jd-misleading-customers-singles-day>, accessed on 20th November 2016.
Pham, S., ‘Alibaba’s Singles Day: World’s biggest shopping bonanza sets new record’, Cnn.com (online), 11th November 2016, < http://money.cnn.com/2016/11/10/technology/alibaba-singles-day-shopping-festival-breaks-records/>, accessed on 22nd November 2016.
Stampler, L., ‘How China’s Singles’ Day Holiday Sold Out,’ Time.com (online), 11th November 2014, < http://time.com/3576381/china-singles-day-history/>, accessed on 20th November 2016.
The Guardian, Alibaba Singles’ Day: a lesson in retail event marketing (online), < https://www.theguardian.com/media-network/2014/nov/18/alibaba-singles-day-retail-marketing>, accessed on 20th November 2016.
Wharton, What Can U.S. Retailers Learn from Alibaba’s Singles’ Day Success?(online), 30th November 2015, < http://knowledge.wharton.upenn.edu/article/what-u-s-retailers-can-learn-from-alibabas-singles-day-success/>, accessed on 21st November 2016.
picture credit: pexels.com
