The 11.11 Debrief: Key retail trends driving 2015

Editor's note: This article is one of several in our complete 11.11 Debrief

Trend 1: China’s internet is “Mobile First”

Chinese search marketers already understand the importance of mobile, with 40 to 60 per cent of search traffic coming from mobiles (depending on search investment and category). But single’s Day really hammered this message home for all brands selling online.

More than 42 per cent of Single’s Day payments were made on a mobile device. Alibaba’s push with sellers to grant “mobile only” discounts, reflecting its battle for mobile supremacy with TenCent, was partly a driver. But the other part is consumers shopping on the desktop and then moving to the mobile to pay in order to benefit from AliPay’s mobile-payment conveniences. At the core this is about Chinese consumers using their mobile as the first or only online device. Therefore, brands need to ensure they think “mobile first” to succeed in 2015 and beyond.

That doesn’t mean just having an app or WeChat brand accounts. It means all digital assets, from advertising to e-commerce, from website to social, from content to tools, need to be rethought with a mobile-first consumer in mind. When did you last check what your mobile TMall looks like?

Trend 2: Local brands ‘get’ e-commerce, global giants starting to take advantage

China used to be a market where local brands played catch up to global giants, be it Unilever and P&G or Nokia and Samsung. E-commerce has largely been the exception. Global giants have started to take advantage of Single’s Day, see for example L'Oreal group’s Beauty Box promotion, NIVEA Men’s ‘Don’t let your men cry’ or the on-going online success of Uniqlo and Jack&Jones. But it’s China’s leading brands that grab the spotlight in the Alibaba 11.11 top-10 sales ranking, again. Eight of the top 10 are Chinese. Three of these are China’s mobile makers, with XiaoMi (#1) leading the pack followed by Huawei and Meizu. Three more top-10 brands come from the home furnishing category, led by Mr. Ling Furnitur. IKEA, watch out.

So brands take note: Instead of looking at Nielson market-share reports alone (which still don’t include online sales), it’s important to look closely at who is leading online sales in your category as well. It’s just a matter of time until these nimble, digital players come knocking on your consumers’ door in every channel.

Trend 3: E-commerce is not about discounts any more

Consistently (and globally) e-commerce has been driven by three key factors: price, selection/availability and convenience. Single’s Day, like much of Chinese e-commerce, has been first and foremost a price promotion. That is changing. All of the three leading mobile phone sellers did not lead with huge price discounts. Their Singles Day draw was the availability of their blockbuster handsets XiaoMi 4, Huawei Mate 7 and Meizu MX4, which are otherwise only available in limited numbers through a lucky draw. This “hunger marketing” approach, while it certainly has a price component, is about desirability and availability first.

Another interesting example is the home furnishing category. Understanding the advantage of convenience has helped Alibaba find success over the past two quarters in home furnishings. Instead of lugging home a new sofa from IKEA (Yes, there is IKEA in China) or paying extra to have your new dining table assembled in your home, delivery and assembly are already priced in for every piece of furniture you buy online. This is topped-off with the comfort of buying from home instead of trawling through uncomfortable furniture malls, with family and crying kids in tow. The key driver for the whole category is convenience.

Global brands in China need to start thinking outside the price box for their online offers and sales activities. Selection and Convenience are a good place to start, but understanding your buyer’s motivation to buy your product online may yield more targeted insights to customize your online offer to build a runway for success.

Trend 4: China e-commerce is more than just Alibaba

Once analysts get over the massive headline numbers of Single’s Day sales, they will soon realize that Alibaba’s Single’s Day revenue growth is slowing down.

Some will interpret this as a sign that e-commerce in China is loosing steam. Stopping the analysis there is a mistake. One of the key reasons for Single’s Day’s slowing growth, surprisingly, is its success itself. In the month before 11.11, every online seller and most large brick and mortar retailers jumped on the bandwagon of awareness that Alibaba has created, launching their own promotions. Online, JD.com was most aggressive, but O2O players like Suning and many brick and mortar stores followed right behind.

Brands hoping to accelerate their own e-commerce growth need to understand that e-commerce in China is not just about Alibaba and its TMall venue. Even during Single’s Day, many other meaningful online channels exist and add value depending on your category and strategy. Carefully consider your brand’s maturity when planning e-commerce for 2015. A TMall + X strategy makes sense in most cases and can add a turbo-boost to your e-commerce growth next year.

As you continue 2015 planning, go ahead and use the Single’s Day trends observed above as a sanity check for your digital and e-commerce plans. Challenge your partners for meaningful answers to the questions posed and start implementing today. 12.12, the next big online promotion day is just around the corner and 11.11.2015 planning should be a strategic initiative starting no later than Q2.

Florian Pihs is senior planning director of strategy, innovation & optimization at SapientNitro China.