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Alibaba’s Grip on Singles’ Day, and China E-commerce Overall, Loosens

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SHANGHAI — Singles’ Day, the world’s largest shopping festival, may be one of Alibaba’s greatest creations but 13 years on, it’s no longer the sole domain of the Chinese tech giant.

For much of the last decade, the sale could be described as a two-horse race between Alibaba and JD.com, the second largest e-commerce player in China. Then Pinduoduo burst onto the scene in 2015, and a fierce three-way battle around the lower-tier cities ensued. This year, Douyin, the domestic Chinese version of TikTok, and Kuaishou, another livestreaming platform focused on the blue-collar migrant class, as well as other platforms have started to eat away at Alibaba’s share of the sales.

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At the same time these new platforms are offering merchants hefty sign-up incentives and bonuses to gain market share, the more established platforms — Alibaba, in particular — have been put under scrutiny by the government for anti-competitive behavior.

Over this year’s Singles’ Day sales period, Alibaba said it earned 540.3 billion renminbi, or $84.54 billion at current exchange, in gross merchandise volume during the 11-day sales period. That represented an 8.5 percent increase from last year, much slower than the 26 percent jump it posted last year. Meanwhile, JD.com reported 349.1 billion renminbi, or $54.58 billion, in sales for the shopping festival, a 31 percent increase over the year prior.

“Competition for share of wallet has long been intensifying on Singles’ Day,” said Bain & Co. in an October report titled “China Retail: A New Definition of Singles Day Success.”

”Over recent years, sales have been increasingly split between a growing number of platforms, as other retailers joined the event’s originator, the Alibaba-owned Tmall, in pushing the shopping festival to fresh heights. Shoppers continue to embrace this fragmentation. More than 50 percent of consumers in our survey said they were planning to shop on three or more platforms during Double 11 this year.”

Much of what’s behind this growing trend lies in the nature of the platforms itself, with Douyin and Kuaishou’s core video competency shining through.

Consulting firm AlixPartners pinpointed livestream shopping as this year’s overall top trend. The company’s survey of more than 2,000 Chinese consumers showed that 76 percent said they would watch livestreams ahead of the actual Singles’ Day this year as a warm-up to plan their purchases ahead of time.

“Livestreaming will continue to drive Singles’ Day sales this year — 32 percent of surveyed consumers said they would spend half or above of their budget via livestreams, increased by 14 percent compared to last year. Among Gen Z shoppers, as many as 94 percent claimed they would spend via livestreaming, whereas authenticity and trustworthiness are the core product selection criteria (49 percent).”

It added, “One main reason for consumers to use livestreaming is to understand detailed product information of items they are considering purchasing (65 percent), which is particularly important for beauty and skin care shoppers (72 percent),” the report said. “Examples of attractive livestreaming content found from those surveyed were personalized discount offers pushed in social groups (53 percent), and exclusive discounts or free gifts offered (53 percent).”

The trend extends past Singles’ Day to the retail sales calendar overall. In 2018, Alibaba held a 66 percent share of the China e-commerce market, followed by JD.com with 19 percent and Pinduoduo with 5 percent. By 2020, its share had fallen to 56 percent, while JD.com retained 18 percent, and Pinduoduo expanded to 12 percent. Research firm eMarketer predicts that Alibaba will account for a 47.1 percent share of Chinese online retail sales this year.

Perhaps most telling is that Tmall’s overall gross merchandise volume target for this year is 4 trillion renminbi, while Douyin — which only established its e-commerce division in June 2020 — is targeting 1 trillion renminbi in sales in 2021. In other words, the Bytedance-owned app thinks it can equal a quarter of Tmall’s number in less than a year and a half of operations.

Alibaba, for its part, has been moving away from headline numbers. This year, Alibaba heavily marketed its eco-sustainability and philanthropic projects during its Singles’ Day campaign — a likely heeding of the “common prosperity” policy from Beijing — and chief marketing officer Chris Tung spoke to media about shifting its focus from pure GMV growth to “sustainable growth.”

Bain & Co. had suggestions for what that might look like. Instead of competing around deep discounts, which data shows leads consumers to treat companies as interchangeable, platforms should compete on customer loyalty, the consulting firm advised.

For Alibaba, that’s evidenced in its 88VIP membership program, which offers benefits across the Alibaba ecosystem from free video streaming on Youku, discounts on food delivery through Ele.me and cash-back vouchers for the online travel platform Fliggy. For JD.com, Bain & Co said, customers highlight its strong after-sales support. For instance, shoppers benefit from a 30-day price guarantee, a 180-day exchange window and installation services.

“While GMV remains an important measure, retailers have an opportunity to reach for a new definition of Singles‘ Day success, one that’s anchored in customer loyalty as well as customer acquisition,” the Bain & Co report said. “By prioritizing other metrics such as customer lifetime value…executive teams can start building a more sustainable and defensible proposition for the long term. We think this shift will help them win throughout the year, not just on the biggest day in the global retail calendar.”