By Coral Zhang and Neal McGrath | Coresight Research
In the footsteps of the 2018 Double 11 Singles Day shopping festival, Alibaba Group CEO Daniel Zhang joined a panel discussion at the Tsinghua University School of Management as part of a university-hosted forum called 2018: Observing China. Coresight Research attended the conference and gleaned the following highlights.
Zhang outlined how Double 11 was created by Alibaba, not just to meet demand for products, but to create new demand. He likened the annual event to the Olympics in which the company seeks to continually set new records.
Indeed, Alibaba has done amazing things with the shopping day since creating it ten years ago – and this year’s Singles’ Day continued to break records:
• Total gross merchandise volume (GMV) reached ¥213.5 billion ($30.8 billion), 27% higher than last year.
• Alibaba’s Cainiao Network processed a record high of over 1 billion delivery orders, up almost 24% from last year’s 812 million orders.
• Tmall Global exceeded last year’s day total GMV in just 6 hours and 29 minutes.
• Over 180,000 brands participated, up from last year’s 140,000.
• 237 of those brands achieved over ¥1 billion (US$14.4 million) GMV.
• More than 40% of consumers purchased international brands.
• Japan, United States, South Korea, Australia and Germany were the top five sources of imported products.
Sales records were smashed at an even faster pace. It took just two minutes and five seconds to reach ¥10 billion (US$1.46 billion) while last year it took three minutes and one second to reach the amount; and just 15 hours and 49 minutes to reach last year’s total GMV of ¥168.2 billion (US$25.3 billion).
He also outlined how the annual shopping extravaganza drives innovation. “All the innovations come from real-world practice,” explained Zhang. Dian Xiaomi, Alibaba’s AI-driven customer service chatbot, was especially helpful during Double 11, when customer queries surge. According to Alibaba, the chatbot can address more than 3.5 million customer queries in a day and understands more than 90% of queries. The chatbot can also analyze customers’ emotions and flag orders that are of higher priority.
Alibaba uses AI software to study customer behavior and personalize recommendations, deals and offerings. Alibaba claims its software helped generate 6.7 billion personalized shopping pages for its Taobao and Tmall e-commerce sites during its 2016 Double 11 shopping festival, and that those pages led to a 20% higher conversion rate compared to non-personalized pages.
New Retail: Empowering New
This year, Alibaba ensured all its 29 business units participated in Double 11. Around 100 Hema supermarkets and 400 RT-Mart supermarkets were converted to Singles’ Day–themed stores and offered one-hour delivery to customers within a three-kilometer (1.8-mile) radius. Some 222 Easyhome stores (China’s second-largest home furnishings chain) also participated in the festival for the first time. Local service companies Ele.me and Koubei (which merged in October) also contributed to the success of this year’s Double 11: Ele.me offered 24-hour delivery service – including delivery for select Starbucks stores in 11 Chinese cities. Around 150,000 merchants on Koubei offered 50% off on catering, beauty shops, hair salons and karaoke bars. Ele.me orders surpassed last year’s total in the first nine hours.
Alibaba also helped domestic merchants reach overseas consumers through AliExpress, which upped its game by extending Singles’ Day to a two-day event ending 23:59 (Sydney time) on November 12. AliExpress worked with Cainiao Network, Alibaba’s logistics arm, to open more overseas warehouses and e-commerce-dedicated intercontinental cargo flights to ensure 72-hour delivery to Europe.
Zhang outlined how Alibaba tapped into changing preferences for food shopping. The older generation is accustomed to shopping at wet markets, open air and often somewhat fragrant. Younger consumers prefer the supermarket experience and are willing to pay for it. Even better, they would like fresh food delivered to their door, when they want it.
So, Hema introduced several new features, notably 30-minute delivery to customers’ homes. This way, consumers can get fresh food delivered in time for dinner – even prepared foods if they don’t feel like cooking – shopping from the convenience of their mobile device.
And, Hema takes its commitment seriously: After one incident in which store employees were found to be changing labels on products to switch the date, the company fired the regional manager and reiterated its commitment to ethical behavior.
International Brands: Move Fast and Embrace Digital
More brands participated in this year’s Double 11 than ever before: More than 180,000 domestic and overseas brands. And, 237 brands achieved a total GMV of over ¥1 billion (US$14.4 million), up from 167 last year. This included international brands such as Apple, Dyson, Estée Lauder, L’Oréal, Nestlé, Gap, Nike and Adidas. The US and Japan remained top two sources of imported products.
[Figure1: Top 10 Countries Selling to China by GMV on 2018.11.11 Global Shopping Festival]
Matthew Price, President of Proctor & Gamble Greater China, shared his company’s results from Double 11. Last year, P&G achieved ¥1 billion in sales in 19 hours. This year, it hit ¥1 billion in just 70 mins. He also noted that while just 7% of P&G’s business is digital in the US, in China more than 30% is online.
Price’s suggestions? Move quickly, react quickly, take more risks and accept failure to succeed. And of course, become more digital: Don’t view ecommerce as just a sales channel, but integrate it into every aspect of business.