SHANGHAI — For this year’s Singles’ Day e-commerce shopping bonanza, revenge spending is out of the picture.
According to data from China‘s National Bureau of Statistics, consumer confidence fell 25.9 percent year-over-year in August as an uncertain economic outlook, continued COVID-19-related concerns and an ongoing property crisis continued to erode enthusiasm.
Jacob Cooke, chief executive officer and founder at WPIC, estimates that year-over-year sales growth for this year’s Singles’ Day will likely be around 11 to 12 percent on average for major platform such as Tmall, JD.com, Douyin and Pinduoduo, which is less than half of the 20 to 30 percent growth rate in previous years.
Despite fewer buying incentives, Singles’ Day remains the most important shopping festival of the year.
“Consumers said their biggest drivers for increased spending are attractive discounts, the expectation that the festival will offer a better deal, and the longer duration of discounts, which allows for extra time to make more discounted purchases,” according to the “Double 11 2022 Consumer Survey” by Alix Partners. For this year’s Singles’ Day, Tmall’s initial sales period, or “preorder period,” started as early as Oct. 20, while main sales events will be hosted on Nov. 11.
According to Alix Partners’ survey, which sampled 2,000 Chinese consumers from different regions and demographics, when asked “how is your spending during Double 11 this year likely to change compared to last year’s,” younger consumers were more likely to increase spending. Sixty-four percent of consumers aged 22 to 26 planned to increase spending, while 60 percent of consumers in the 18 to 21 age group planned to spend more.
The report found that compared to last year, 48 percent of consumers intend to increase their spending in the “necessities and high-quality products” category. In the “clothes, fashion and footwear” category, 44 percent of respondents intend to increase spending. For the “home care and lifestyle products” category, 38 percent will be spending more.
For the “luxury goods or watches and jewelry” category, only 16 percent of respondents plan to increase spending, with 39 percent of surveyed consumers having no plans to purchase luxury goods at this year’s event.
Fatigued by increasingly complicated discount mechanisms in previous years, shoppers are more likely to seek out more straightforward discounts this year. According to Cooke, many merchants have opted for “more creative discounting mechanisms, such as more free gifts.” This sales tactic sits well with consumers who became more accustomed to stockpiling during the pandemic. They are also “likely influenced by the recent uptick in COVID-19 cases across various parts of China,” the report said.
For Tmall, one of the largest e-commerce platforms in China, this year’s focus will be retaining 88VIP customers. According to Tmall, these loyal customers, who pay an annual fee of 888 renminbi, or $122, can enjoy a 5 percent discount on products from over 300 merchants. These loyal shoppers contributed to more than 40 percent of brands’ sales growth during this year’s 618 shopping festival, China’s second-largest shopping festival after Singles’ Day.
“If you go back to five years ago, Tmall global really put in an effort to engage on the VIP front and to create a special club feeling, but that program kind of fell away, and Tmall didn’t do much for the past few years. So now they are going back to that,” Cooke said. “Tmall realized that these [88VIP] consumers are primarily female in their early 30s and 40s. They’ve got the buying power.”
Livestreaming, one of the most popular mediums for Singles’ Day in recent years, is losing steam this year.
“Only 74 percent of surveyed consumers say they will watch or participate in livestreaming this year, down from 97 percent last year,” according to the report. But with livestreams offering “free or exclusive gifts, discounts, personalized offers, and the ability to pressure-test the look or quality of a product in a way that’s not possible with a traditional commercial,” the medium remains attractive.
Alix Partners said that “live commerce is still attractive to most Chinese consumers, with one-in-three livestream viewers expecting over 25 percent of their total Singles’ Day spending to occur through livestreaming,” wrote the report.
Having Tmall’s livestreaming star Austin Li back online after a three-month hiatus has helped the platform create more clout around its Singles’ Day campaign. According to local data agency Morketing Research, on Oct. 24, the first day of preorder sales, Li attracted more than 450 million viewers, double that of last year’s Singles’ Day. Morketing estimates preorder sales reached 13.2 billion renminbi, or $1.8 billion, during Li’s livestreaming session. Brands including La Mer, Proya and Zhuben broke their preorder sales records compared to last year.
While Tmall remains the leading livestreaming platform, Douyin, the Chinese version of TikTok, has emerged as a strong opponent this year. According to Alix Partners, Douyin “is catching up aggressively.”
“Fifty-eight percent of respondents who plan to participate in livestreaming will use the short-form video platform, up from 38 percent last year,” the report said.
According to Cooke, Douyin’s secret weapon is a more interest-driven algorithm that helps “recreate a shopping experience akin to shopping at a mall.” In comparison, “Tmall and JD.com’s designed to suggest products that you probably already saved or bought,” Cooke explained.
“But rest assured, Tmall will do something about this. They have a huge war chest and tons of money in the bank to help them quickly catch up,” Cooke added.
Cooke thinks Douyin will likely overachieve in the apparel category while Tmall will probably underachieve. “For other categories, Tmall will overachieve, and Douyin is still maturing,” Cooke predicted.
“It’s the new generation of shoppers, especially the new generation of young women, that Tmall will have to be careful about. They are using Douyin, and they will stay on Douyin,” Cooke said.