Singles’ Day is a highly anticipated sales event in China, equivalent to that of the Black Friday in the west. While the actual sale is supposed to take place on 11 November (11.11, hence the name Singles’ Day), key eTailers such as JD.com, Tmall and Suning usually start their promotions from 1 November onwards.
Although the Singles’ Day sale covers all kinds of products, IDC’s close look at smart connected devices is most interesting, since competition in this field is so intense that many device vendors have formed a marketing team just for this sale. Most probably these teams will camp in the offices of Tmall and JD.com on 10/11 November so that they can make quick changes to their strategies to compete with other vendors.
Vendors gear up for the Singles’ Day event in China
Smartphones, notebooks, monitors, 2-in-1s, drones, smart robots and wearables are expected to be key products this year that will be most sought after by consumers and vendors will also focus more on their technological capabilities in their marketing messages.
Some key highlights of vendors’ strategies for Singles’ Day in 2016 include:
1. Live streaming by celebrities: Vendors will be using more interactive methods to reach out to consumers. Celebrity endorsers of various brands will be using live streaming to reach out to consumers and to market the brands during the Singles’ Day sale. CEOs of certain vendors are also expected to do the same in front of the camera.
2. Launch of new products through pre-orders to drum up attention: Towards the end of October, vendors have already started offering the option of pre-orders for some of their items. This largely serves two purposes. Firstly, it helps vendors to get a gauge of the demand for their products to better manage their inventory. Additionally, this pre-order is only for a limited period of time and consumers may feel pressured to sign up for it to purchase the products. If consumers choose the pre-order option by paying a deposit in advance, they can secure the product at a low price during the sale.
3. Competition between key vendors is expected:
- LeEco versus Xiaomi. In the smartphone market, the Le Pro Series and Mi 5s are two direct competing products. The demographics of consumers for these two brands are largely similar, and they both focus on the 5<5.5 inch segment and having a full HD display, with prices in the mainstream US$220<US$300 range. Both vendors which have a focus on online channels need to use Singles’ Day to prove their position in the market.
- HP versus ASUS. Lenovo has maintained its strong number one position in the gaming PC market in China. However, HP’s gaming notebooks have also been on the rise recently, affecting ASUS’ second place in the market. Both vendors have not been able to obtain high market share for the ultra-slim notebook market. To increase their market share, there will be intense competition between these two vendors during the Singles’ Day sale.
- Lenovo versus Dell. In the ultra-slim notebook segment, Lenovo’s Xiao Xin Air and Dell’s Ran have been emphasizing two key trends in the consumer notebook market, being ultra slim and having a slim border. Both vendors also hope to target the mid-range to high-end market. It will be interesting to see how they market their ultra-slim products during this sale.
With the market maturing, IDC expects the Average Selling Price (ASP) for devices during Singles Day to be higher than that of the previous year. As Xiaohan Tay, Senior Market Analyst, Client Devices Research, IDC Asia/Pacific, puts it: “Consumers are seen to have a greater need for better products and we expect them to be willing to pay more for these devices. Additionally, vendors are also marketing a wider variety of products, trying to push more mid- to high-end products and are seen moving away from the low-price competition as seen in the previous years. Other than what we have mentioned above, we expect competition among vendors to be intense this year and it will be interesting to see what other strategies they try to use to stand out from their competitors.”
China's eTailers drum up attention for Singles' Day using VR and live streaming
The Singles’ Day sale in China often sees a strong competition between Alibaba, JD.com and Suning, which are the largest eTailers in China. Last year, Alibaba was the biggest winner as its total transactions during the Singles’ Day period hit US$14.3 billion.
1. eTailer dynamics: Alibaba and Suning have formed a joint venture known as “Mao Ning” in October. This firm will be used to manage the supply chain for Tmall and Suning. Alibaba’s strength is the wide reach that its online platform (Tmall) has, while Suning’s strength is in its wide coverage of offline retail shops and management of supply chain/logistics. During the Singles’ Day shopping season, Suning will focus more on handling the supply chain logistics, while Alibaba will focus more on marketing online to reach out to a wider base of consumers. Prior to this, Suning already has an online store on Tmall’s site and this will further help to strengthen the working relationship between these two companies. With these two companies joining forces, they will be able to leverage each other’s strengths to compete more aggressively with JD.com.
To strengthen its offline retail channels and better position itself as an international brand, JD.com acquired eTailer Yihaodian from Walmart earlier this year. It will be able to widen its source of imported products using Walmart’s supply chain and strengthen its positioning for groceries when compared to Tmall during the Singles’ Day sale. Starting from October, Walmart’s flagship store can also be found on JD.com.
eTailers are also seen trying to target certain vendors to build a better relationship with them. For example, Xiaomi and Canon work more closely with Tmall, and are able to get better advertisement slots on its website. On the other hand, Lenovo, HP and Epson have a closer relationship with JD.com, and use flash sales and discounts to drive up their sales.
2. Use of VR: Alibaba introduced a virtual reality (VR) shopping program known as “buy+” this year, and a basic user with a cardboard viewer can be virtually transported and enter various retail shops overseas in the US, Japan or Europe to have a 360-degree view of the shops there. The user can easily focus on an item in the shop, have a 3D view of it, and the price and a short description of the item will pop up. The user will also be able to easily purchase the item in virtual reality, which is a rather interesting way of providing consumers with a new shopping experience.
3. Longer sales period: The duration of the Singles’ Day sale is longer this year, and eTailers are coming up with various ways to keep the momentum up over the entire period. From October 21 to 31, eTailers started having “warm-up” promotions for various products. For instance, Tmall focused on selling technology products between October 24 to 26, with limited quantities of products sold at certain times of the day at a very low price. It also provided discounts and rebates during this period. From November 1 to 10, there will be a vendor and brand day as well as a product category day. They will also use cash and vouchers to attract consumers to purchase more items. Along with the live streaming shows with celebrities on the night of November 10, eTailers will drum up excitement for the Singles’ Day sale with a climax, hoping to get more consumers to purchase products on that day.
4. Entertainment factor played up: On top of holding its usual night carnival on Singles’ Day, Alibaba will also invite celebrities, Olympic champions, as well as well-known people in the industry to join its livestreaming event this year, hoping to generate more sales by engaging more fans. JD.com will also be using similar livestreaming strategies.
“With the competition getting heated up, eTailers are seen using different methods to try to outwit one another and differentiate themselves from each other. Alibaba’s use of livestreaming and VR clearly stands out this year. Although consumers may still prefer to purchase directly from their mobile app given that it is more convenient, VR shopping will definitely pick up in the coming years once the technology matures and consumers are provided with a better user experience that comes with clearer and sharper images,” says Xiaohan Tay, Senior Market Analyst, Client Devices Research, IDC Asia/Pacific.