Strong Momentum for Food-Related Sales on Singles Day

Alibaba’s Singles Day 2019 sales surpassed the 2018 record of USD 30.8bn at 4:31:12 p.m. CST, with total sales value hitting USD 38.4bn, 26% YOY growth. The momentum in food-related sales remains strong, with Three Squirrels retaining its first-place position.

Lower Tier Cities and Quality Consumption Drive Another Record-Breaking Singles Day

What once started as a joke holiday to celebrate being single, has developed into a global online shopping festival. China’s e-commerce giant Alibaba kicked off the 2019 Singles Day event with a concert by Taylor Swift on Sunday night. On Monday ’11.11’, e-commerce giants offered discounts on goods – from packaged food and beverages, to TV sets and even healthcare. According to statistics released by Alibaba, total Gross Merchandise Value (GMV) reached USD 38.4bn on Singles Day 2019. Its rival, JD.com also reported a total GMV of USD 29.2bn for the event (JD held the event from November 1 to November 11).

The results from Singles Day were a relief to retailers who worry about fading consumer demand in China. It shows that Chinese consumers remain confident in spending and that they still seek quality, whether it is in lower-tier or upper-tier cities. Consumers from lower-tier cities (e.g. Guilin in Guangxi province and Yibin in Sichuan province) contributed hugely to the growth in Singles Day sales. JD, for example, reported that the number of lower-tier city users placing orders increased by 60% YOY on Singles Day.

For food-related sales, Three Squirrels continued to be ranked in first place, with total sales (online and offline) on Singles Day reaching USD 150m – over 50% YOY growth compared with 2018. Other food & beverage brands falling into the Tmall (Alibaba’s business-to-consumer sales platform) top-10 list include: Moutai (spirits), Wuliangye (spirits), Be & Cherry (snacks), Bestore (snacks), Dayi (tea), Mengniu (Dairy), Nestlé (food), Yili (dairy) and Arawana (packaged oil). Those top-selling brands benefit from their innovative consumer engagement techniques (e.g. livestreaming, broadcasting), offering high-quality flagship products, and their rich previous experience of operating on Singles Day.

Livestreaming Is the Medium of Choice for Brands to Engage With Chinese Consumers

Livestreaming became a key technique for brands aiming to engage with consumers, in order to achieve better sales during Singles Day 2019. Tmall has been actively building up the global network of ‘mega-popular influencers’ (‘wangzi’ in Chinese). These influencers become the lifestyle consultants/opinion leaders among online consumers. Just a few days before ’11.11’, Kim Kardashian, the reality TV star and social media influencer, ran a livestream together with China’s top opinion leader, Viya Huang, drawing 13m viewers to mark the entry of her fragrance brand KKW on Tmall. Though most popular in beauty sector, livestreaming is also happening in food. ‘Food livestreaming broadcasting’ has actually stimulated the desire to buy food. Leading chocolate brand Dove prepared well for Singles Day, inviting Angela Baby, one of the most popular movie stars in China, to be the host for its livestreaming in late October. Through the livestreaming activities, plenty of pre-sales orders have been placed by local consumers.

Having those influencers as livestream hosts is an essential part of the consumer discovery/purchase journey. Livestreaming used to be an option for brands to engage with Chinese consumers, but now, as those influencers carry such significant branding power, livestreaming is almost essential for brands that want to be successful in China.

Debut of Mondelez-Tmall Newly Co-Developed Mini Oreo Assorted Nuts Snack

Mondelēz works closely with Alibaba to delight Chinese consumers by unveiling new innovations every year. A more recent strategic cooperation involved Mondelēz working together with the Tmall Innovation Center (TMIC) to co-develop innovative products. Mondelēz and TMIC established a consumer-to-manufacturing/business (C2M/C2B) innovation factory in Suzhou, to offer more customised products for Chinese consumers, empowered by the data/tech/ecosystem behind the tech giants (See our report on The Rise of China’s Supertech Giants). The move to a C2B factory indicates that platforms/data/tech are hugely important and have moved down the supply chain. With the focus on the consumer, reversed data flows now guide production/innovation. The co-created Mini Oreo Assorted Nuts Snack, was pre-launched before 11.11 to test the agile and never-satisfied Chinese consumers. This flagship product has been one of the most popular add-to-cart snacking products among younger Chinese consumers on Singles Day.

Implications

Moving forward, we expect the impact of platforms/retailers to be broader, as they offer new experiences, and impact the whole value chain across production (C2B-reversed model), distribution and consumer engagement (e.g. livestreaming to influence purchasing decisions).

Given the ongoing upgrading of consumption in China, especially in lower-tier cities, we expect huge opportunities for high-quality brands. With help from platforms/retailers driving more efficient supply chains, those brands can adopt new business models, leading to the wider adoption of the C2B model. In the long-run, on-demand consumer-to-manufacture models will perhaps appear. The future lies in platform operators (e.g. Alibaba/JD) delivering customized/personalized products to the consumers’ door from a co-developed manufacturing site (e.g. Mondelēz/TMIC C2B factory).


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