Alibaba, JD.com and Pinduoduo, the leading e-commerce players in China, have been engaged in fierce competition in this year's Singles' Day shopping festival, each trying to underpin their company's growth via the country's biggest online event.
Singles' Day – or Double 11 – is the largest and loudest online shopping festival in China. First started by Alibaba in 2009, it has grown from a CNY 19.1 billion (USD 2.7 billion) event that year to an over CNY 300 billion (USD 42.8 billion) buying spree in 2018, contributing to 3.5% of the total online retail sales for the whole year.
The competition between the three giant marketplaces – Alibaba, JD.com, and Pinduoduo – has been heating up in 20 days before November 11. In the race to draw in users, Alibaba invested CNY 50 billion, while JD.com and Pinduoduo have launched ‘billions of subsidies’ to attract users, with CNY 10 billion each; in terms of differentiation strategy, JD.com chooses to focus more on 3C products and low-tier city users. Pinduoduo, to the contrary, targets both low-tier and first-and-second-tier city users, leveraging its brand image by providing more brand products and poverty-alleviating projects. Alibaba, which relies on the advantage of its technology and its online-offline ecosystem, is expanding its influence through the various channels of Taobao, Tmall and the offline fresh grocery store Freshippo, all helped by the payment tool Alipay and Cainiao logistics.
For a more aggressive promotion strategy, many merchants on these marketplaces have launched pre-sale or pre-order mechanisms, hoping to gain more market share by early promotion. On the one hand, merchants can predict the total order quantity based on the pre-sale amount, then carry out cost control and order management. From the perspective of the marketplaces, it also relieves a lot of pressure on the servers that are pressed hard on that night due to Double 11 shopping traffic.
Looking back at the pre-sale data for the past three years, gradually a barometer of performance leading up Double 11 takes shape. According to TF Security and Syntun data, in 2017-2018, the proportion of pre-sale transactions accounted for 33.2-34.6% of the transaction volume of Singles’ Day.
In addition, an increasing number of merchants with more varied product categories are among the pre-sales figures. The pre-sale Stock Keeping Units (SKUs) in 2018 accounted for 6.2% of the total SKUs available during the buying season, double that of 2016.
The pre-sales in different categories in the past three years showed that personal care and cosmetics, 3C products and office supplies are the top three categories with the highest percentage of pre-sales in comparison with the total sales results. Their pre-sale volumes accounted for 47%, 43% and 36% respectively in 2018.
Three aspects we found shaped this year's Singles’ Day: a growing number of new users, a wider collection of new products and a new stage for social and live streaming promotion.
New users: In the past year, the number of mobile users increased by 160 million to 1 billion year-on-year, of which the contribution from low-tier cities was the main driving force. According to AliResearch, the low-tier city users have strong consumption potential and have become the target of many parties.
New products: Tmall has released 90 million new products as of September 2019, of which 1 million will be issued during the Double 11 period. JD.com is responsible for the launch of all the new 5G brand mobile phones. Jingxi (京喜), the social networking platform under JD.com, is expected to release more than one million pieces of products priced CNY 1, targeting low-tier city users at the same time. Pinduoduo is also inviting a lot of high-end brands to settle on its platform and has been nurturing over 100 international brands with more than tens of millions of revenue this year.
New marketing channels: to aggregate e-commerce content and traffic, short video platforms contribute nearly 40% conversion rate and billion-level traffic, while the live broadcast with low decision-making costs and high interaction effectively stimulate the consumption potential of the core population.
Tonight will surely unveil another shopping carnival in China's e-commerce history; EqualOcean will update the upcoming news during this period.