Alibaba’s Singles’ Day, or 11.11, has never been so split. On one side, there’s the consumers’ insatiable appetite for sought-after products with heavy discounts. For example, within 25 minutes, 410 thousand bottles of Estée Lauder’s Advanced Night Repair eye cream were sold during Tmall’s Singles’ Day presale on October 21, breaking last year’s 11.11 entire day sales record for the brand.
On the other side is Alibaba’s fear of Singles’ Day losing its allure. Despite being the first of its kind in China, Singles’ Day has become just one of many other discount holidays like 618, the promotional festival invented by Alibaba’s top competitor, JD.com. To add luster to the event, Alibaba has presented a countdown gala for Singles’ Day since 2015, inviting domestics and international superstars to perform. Taylor Swift was featured this year.
Even so, last year’s Singles’ Day reflected the slowest growth rate in the past eleven years. Yet, while first-tier cities represent the majority of Singles’ Day’s top 10 cities by sales, tier-three and below cities represent over 55% of all consumers for Singles’ Day. While top-tier Chinese cities already have access to information about luxury brands and their products, luxury brands should start to prioritize Singles’ Day as a crucial marketing event to reach China’s vastly underserved consumers in lower-tier cities. Here, two insights for future Singles’ Day strategies on how to better attract and engage with this ever-increasing market segment during Singles’ Day.
Live-Streaming Gains More Loyal Viewers from Lower Tier Cities, but It Also Comes With Risk
The growing influence live-streaming creates in driving sales and social engagement with consumers in China provides a new channel for brands to present themselves and sell products, especially to the lower-tier city consumers. According to Zhong Wen, from Taobao’s Content Ecommerce Division, lower-tier city consumers spend far more time on watching live-streaming than higher-tier city consumers and are much more loyal to this channel. But perhaps the biggest gain from live-streaming during Singles’ Day is not simply record sales figures, but the effectiveness to reach the “unreachable” consumers given the volume of this event.
As there are multiple live-streaming players in China today, brands should look beyond Taobao and TikTok live- streaming during Singles’ Day, as the two are most popular formats among higher-tier cities. Instead, turning their sights to lesser known Kuaishou, whose users are mainly from lower-tier cities and could perhaps see a bigger gain and better reach for lower-tier cities consumers. Additionally, as Kuaishou has recently partnered with Pinduoduo, and linked its live-streaming service directly with the e-commerce platform‘s backend system, the two’s synergy in user profiles can further drive sales.
Nevertheless, regardless of platforms, brands should be careful about how they present themselves beyond providing discounts when partnering with live-streamers, as live-streaming is often the first entry point to a brand’s journey with many of the lower-tier residents. Also, selecting the right livestreamer with the right credibility and reach in a specialized area among consumers is critical.
For example, when Taobao’s top live-streamer, Jiaqi Li (李佳琦), best known for his ability to drive lipstick sales, extended his partnership outside of the beauty category, problems occurred. In a recent live-streaming session to promote a non-sticking pan, Jiaqi Li failed to fully understand how to use the product correctly before live streaming and suffered for his mistake. Even though the pan was later proved to be legitimate, his failure to try out the product before livestreaming hurt his credibility in promoting different categories outside of beauty. In a make-or-break time like Singles’ Day, such a mistake could be irreversible for the brand. Nevertheless, the top live-streamer’s ability to drive sales is still highly attractive. Last year, Li’s sales record for 11.11 was estimated to be around 300 million RMB ($43 million). This year, according to Alibaba’s SVP Tianhua Zhong, Li is estimated to reach 1 billion RMB ($143 million) in sales during Double 11.
Think About New Channels to Reach This Market Segment
While many people believe that the majority of Chinese consumers tend to be incentivized by games and entertainment-related content when they’re shopping online, this is not true when it comes to Singles’ Day, where price is the biggest incentive — especially for lower-tier city consumers that are more sensitive to price online.
Also, complicated promotional rules will only lead to consumers’ discontent. For example, netizen liujing_777 from Bijie, a Chinese fifth-tier city, recently complaint on Lancôme’s Weibo Official Account about a Singles’ Day promotion on how she paid an “intelligence tax”(智商税) to the brand by buying an additional bottle of the Lancôme Tonique Confort because of her misunderstanding of the complicated promotion description.
Moreover, to better target this group of consumers, who represents much of the future luxury growth, brands should consider taking a chance on Singles’ Day and partner with an e-commerce platform like Pinduoduo that has over 300 million users, most of whom are from lower-tier cities. And, as Singles’ Day and Pinduoduo both emphasize discounts, it’s a perfectly timed opportunity for brands to test out the reaction of consumers on Pinduoduo without embarrassing themselves. In addition, despite a reputation for fake products, brands from Nike to Chow Tai Fook have set up their own flagship stores. After all, the immense opportunity to reach and engage lower-tier city consumers on Pinduoduo outweighs the chance that consumers will have doubts about this platform.