This year’s TMALL global shopping festival on Singles’ Day looked a bit different.
With the impact of the coronavirus pandemic on the China economy, the Singles’ Day Shopping Festival 2020 has not only become a lens into China’s consumption recovery but also had a deeper meaning for economic growth in the country during the pandemic. The Singles’ Day Shopping Festival, which has run for twelve years, concluded with gross merchandise volume (GMV) of RMB 498.2 billion (US$74.1 billion) on the Tmall platform in 2020.
Singles’ Day has highlighted the sizable potential of the Chinese consumer market and strong resiliency in China’s economic growth, while also reflecting the recovery of consumer confidence. According to upcoming Mintel research on Consumer, more than nine in 10 consumers say that their personal financial circumstances will improve in the next 12 months, and nearly three in 10 say that they are highly confident.
Singles’ Day has become a grand carnival for all consumers across China, with the turnover skyrocketing along the way in the past 12 years, but we can also see a myriad of challenges the Singles’ Day faces behind this new record.
Challenge in growth
The sales on Tmall during the Singles’ Day shopping event hit RMB 498.2 billion this year, far higher than RMB 268.4 billion in 2019, but this result was mostly driven by an extended promotional period in 2020. The Singles’ Day sale cycle in 2020 included two waves. According to Tmall data on the Singles’ Day, the accumulated turnover between November 1 and 0:30 on November 11 exceeded RMB 370 billion. The 2020 Tmall Global Shopping Festival registered sales of RMB 498.2 billion, an increase of 26% over the previous year in the same cycle and dimension, said Jiang Fan, president of Taobao and Tmall, in his summary speech. This increase is roughly comparable to growth in the two previous years. It is foreseeable that the Singles’ Day shopping festival will gradually evolve from a shopping day to a shopping season in the future in order to continue the GMV growth and reduce pressure on platforms and logistics from a large influx of orders, and an extended promotion period will become the norm.
Challenge from competitors
JD.com’s accumulated order value was finally fixed at RMB 271.5 billion (about US$41 billion) during the Singles’ Day shopping extravaganza this year, up 32.8% over 2019. This number also marked the highest growth over the two previous years. Pingduoduo did not disclose its Singles’ Day sales result as usual. Nevertheless, Pingduoduo has been close on Tmall/Taobao in terms of average monthly active user (MAU) and its average transaction value (ATV) has constantly risen, as shown in the company’s fiscal fourth-quarter 2020 results. The appeal of Pingduoduo to brand operators will be enhanced. The rising e-commerce platform used an increasingly simple and crude approach to promotion during the Singles’ Day period, i.e., saving time of merging orders or “Save XX on Every XXX” and offering direct price reduction. This no-trick fashion is more attractive to those shoppers who are fed up with complicated promotions.
Despite these challenges, Singles’ Day remains as a promotion festival that needs to be watched most by all brands. To retain consumers and arouse their desire to buy is a top priority for all brands in Singles’ Day operation.
Online and offline fusion
Over the past twenty years, the development of China’s e-commerce industry has mainly benefited from the Internet user base growth, the per capita disposable income increase and the remarkable progress in e-commerce resource allocation capabilities. As the traditional e-commerce business growth has slowed, offline retail and the service sector will become a focus of competition among online e-commerce platforms in the future. In particular, local life, health and healthcare services, offline education and automobile aftersales will be more added to Singles’ Day shopping carts to meet consumer’s life needs.
Improving Singles’ Day shopping experiences
Although this year’s prolonged Singles’ Day shopping time frame reduced balance payers’ anxiety about failing to pay for all the items in their shopping carts, consumer complaints about Singles’ Day are still centered around the complexity of promotion rules and gameplays. Fairly intricate rules such as posting a reply, stroking a cat or inviting a friend lead to complaints about too many gameplays among consumers who expect real benefits, and even dampen enthusiasm for shopping on the Singles’ Day. According to upcoming Mintel research on Consumer, nearly half of consumers agree that they will buy as needed rather than necessarily wait for promotion, according to Mintel data. The Singles’ Day Shopping Festival was created at the very beginning to generate and meet consumer needs on the same day. However, if the complexity of gameplays is leveraged to intentionally increase consumer needs, this will not only impair shopping experiences and result in more adverse opinions on fostering consumerism, but also cause the Singles’ Day to deviate from its nature.
Looking ahead
Notably, a heated debate over consumerism sparked by Ant Group’s suspended IPO and combination measures at the regulatory level, including the Anti-Monopoly Guidelines on Platform Economy (Draft for Comment) issued by China’s State Administration for Market Regulation (SAMR) on November 10th create uncertainty for the future of Alibaba’s business. Although these policies and measures have had a certain impact on platform economy, we believe, these regulations will make the competitive landscape of platform economy more balanced and sustainable and thus, drive the long-term growth of China’s Internet economy, as platform economy will bring more innovation vitality and digital opportunities to the China economy as a whole.
In spite of many challenges, Singles’ Day will remain as an important shopping spree for China’s e-commerce industry and consumers. For consumers, changing gameplays and promotions cannot stop shopaholics from buying worldwide; for brands, the Singles’ Day is like a vanity fair where players are in the rat race, as well as one of the promotional seasons that need to be watched most.
When turning twelve, teenagers will be more independent though they may go through a period of rebelling and feel confused. After twelve years of growth, the Singles’ Day shopping festival has reached a new peak. We also believe the future Singles’ Day will continuously push forward the retail commerce in China and deliver better products and services to consumers.
