Singles' Day 2023: From KOLs to trust, the changing dynamics of consumer choices

It’s that time of year again when Singles’ Day, Double 11 or 11.11, the world’s largest shopping event, is taking the world by a storm. The presales period kicked off with JD (October 23) and Tmall (October 24) firing the first salvo in an industry-wide price war to win consumers and their wallets. 

However, despite attractive discounts of up to 60% to 80% (by domestic players), brands are jittery about performance during this year’s shopping festival. Even though China’s economy has turned a corner with a reported 4.9% growth in Q3 year on year and 1.3% sequentially from the previous three months, consumers are putting the brakes on a spending spree. Bain & Co.’s Singles’ Day report finds that shoppers are feeling the squeeze and conscious in spending. In fact, more than three-quarters of the 3,000 consumers Bain surveyed plan to spend less or maintain spending at 2022 levels. There are indications that the festival is losing its shine; only 53% of respondents said they were excited by this year’s shopping extravaganza, compared to 76% in 2021.

Britton Russell, partner and Greater China lead for consumer and retail practice at AlixPartners, comments on the budget-friendly and purchase-prudish mentality, which isn’t new, but the phenomenon is played at a different level this time.

“Consumers are knowledgeable about potential purchases and more prudent than ever before. They seek maximum value with every purchase.” It is estimated that this year, on average, consumers are spreading screen time on five different platforms to find the right deal, compared with 4.1 in 2022. 

Forrester’s principal analyst Xiaofeng Wang echoes similar thoughts. 

“The quest for value will dominate the consumer mindset,” he says. “The low-price strategy shows that big players are under the pressure of increasing competition from new players such as Pinduoduo and Douyin (Chinese version of TikTok).”  

Apart from the price wars that dominate headlines, Wang emphasises that “the low-price strategy is backed by increasing work efficiency and lowering operational costs supported by advanced technologies such as generative AI.” From content creation to virtual hosts and chatbots, generative AI lowers costs and risks and improves customer experience.

L-R: Suki Lin, Britton Russell, Xiaofeng Wang

The most eye-catching arena of this shopping season is still live streaming and KOL marketing. In fact, livestreaming has been the driving force of Taobao Livestreaming revenue with Austin Jiaqi Li, the ‘Lipstick King’ generating billions of yuan in sales and becoming a household name over the years. 

However, over the years, public disputes like the 2021 case where two Chinese livestreaming sales stars, Li Jiaqi and Viya, highlighted how L’Oréal was selling cheaper products on its own platform than what it promoted during the 11.11 festival, consumer trust on best discounts and KOLs statements has been dimming.  

Last month, a survey by AlixPartners’ revealed that livestreaming (46%) and recommendation of KOLs (45%) had become the least important considerations for purchase decisions among the 20 surveyed factors. Understandably, authenticity, trustworthiness, and product functionality (including durability) rank as the top two considerations. Only 22% call livestreaming out as a reason key for shopping, compared to 32% in 2021. 

To stand out in this highly competitive market, brands need to leverage the power of influencers and livestreaming platforms, which can help them connect with their target audiences and showcase their products in an engaging way.

Suki Lin, regional director of Asia-Pacific at Nativex, a mobile advertising platform, explains the influencer marketing strategy: “It’s an enticing strategy, and leveraging social media is crucial for brands in China, with over 1 billion internet users engaging on these platforms. Instead of relying solely on livestreaming and discounts, brands can drive sales by connecting with consumers seeking recommendations and trends. Building credible, trustworthy, and authentic consumer-influencer relationships on these platforms is vital for success.”

One of the most popular livestreaming platforms in China, Douyin, the Chinese version of TikTok, has a 23-day shopping festival that culminates on November 11, aims to achieve a gross merchandise value (GMV) of over 100 billion RMB (around US$ 14 billion), according to Chinese media reports. However, its e-commerce department denied the number and said it does not disclose GMV data.

Livestreaming is a major source of revenue for Douyin, as it allows influencers and celebrities to interact with their fans and promote products in real time. Last year, livestreaming revenues accounted for 70% of the total GMV for Douyin e-commerce.

Douyin also offers a new channel for growth for many brands, especially in the beauty sector, as its algorithms help balance traffic and competition within a category. The platform also supports brands with more resources, such as data analysis, content creation, and marketing campaigns. According to Chinese media, C-beauty brands, such as Proya, Florasis and Perfect Diary, have all increased their investment in Douyin compared to previous years.

Livestreaming platforms are not the only ones competing for lower prices and higher sales during the Double 11 festival. Other e-commerce platforms, such as JD.com, Tmall, Taobao, and Red, are also joining the fray with different strategies and challenges.

JD.com, for instance, challenged Li Jiaqi’s livestreaming by promising even lower prices than his. The platform attracted over 140 million viewers to its new livestreaming sessions in the first week, marking a strong start for its online sales.

Tmall and Taobao, both owned by Alibaba, launched their official shopping festival on October 24, with lower prices as a key strategy. Tmall updated its 88VIP system into three levels, offering more discounts to higher-paying members. It also partnered with Tencent’s WeChat to share coupons via social media, and with other platforms like Bilibili, Weibo, and Zhihu, to drive traffic through content marketing.

According to R3, a consultancy firm, Douyin ranked as the top digital advertising revenue maker among the four digital giants in the first half of 2023, followed by Alibaba, Tencent, and Baidu. Red showed the strongest growth momentum among the four key digital platforms, while Weibo was the only platform with decreasing digital advertising revenues.

 

While Douyin, Alibaba, and Red are leading the digital advertising market, other social media platforms are also offering opportunities for brands to leverage influencer marketing. Nativex, a mobile advertising platform, has conducted an in-depth analysis of the top influential social media channels in China and how brands can benefit from them.

Lin from Natiex said that different platforms have different characteristics and preferences.

For example, Douyin users are open to new products, but Kuaishou has a higher conversion rate. BiliBili suits Gen Z marketing, while Red requires brands to build reputation and engagement. Weibo is effective in influencing female consumers through tailored discussions. Brands need to tailor their campaigns accordingly to hit the jackpot this season.