Not Just a Sale, 11.11 Is Glimpse of Tomorrow’s Retail

Every year before Alibaba’s 11.11 Global Shopping Festival, there’s a lot of speculation about how much turnover the event will generate. This is not surprising since it’s the world’s largest sale. Alibaba’s festival stimulated spending of more than $14 billion in GMV last year, dwarfing online sales from shopping holidays such as Black Friday and Cyber Monday.

Fixating on GMV misses the real significance of 11.11, however. Started in 2009 as a way to attract more people to online shopping, the event has evolved from a mere fire sale in cyberspace into a cultural phenomenon. For consumers it’s a celebration of China’s growing purchasing power, when shoppers splash out on extravagances like the latest consumer electronics and luxury cars while others in rural areas purchase their first TVs, washing machines and electric rice cookers.

For businesses, 11.11 has become a signal event on the Chinese and even the global retail calendar. With millions of shoppers poised over the “buy now” buttons on their smartphones and PCs for 24 hours, merchants and marketers vying for shoppers’ attention transform 11.11 into a kind of living laboratory for retail and marketing innovations, rolling out new products and new ways to engage with customers online and offline.

They learn what works and what doesn’t. Often what works becomes incorporated into their businesses in year ahead. In this sense, 11.11 has become nothing less than a glimpse into the future of retailing.

Alibaba is an active partner with merchants in building this future. The retail industry worldwide is in need of digitally driven re-invention. By applying internet and big data technology, online and offline can be integrated, supply chains can be made more efficient, and the needs of consumers can be better anticipated and met. The 11.11 sale is a proving ground for Alibaba’s vision of this data-fueled New Retail Economy.

Some examples: in the runup to this year’s event, many merchants have been using Alibaba’s live-streaming capabilities to introduce their brands to consumers and get customer feedback in real time. The company is also trying to make “online-to-offline” or omni-channel retailing less of a buzzword and more of a reality. Ahead of the sale Alibaba worked with 80,000 physical shops to help them establish digital connections to better serve customers through membership programs, to deliver more services, and to more efficiently allocate inventory.

All told, a million or so storefronts are dipping their toes into omni-channel during 11.11, some of them through an Alibaba augmented reality game that drives consumers to physical shops. The company aims to prove that the offline world doesn’t have to be threatened by the online. They can be mutually supportive.

For this to happen, though, retailers need foundational commerce infrastructure: interconnected marketplaces, e-payment systems, logistics networks, cloud computing and big data—all on a scale that only Alibaba is positioned to deliver.

Consider that Cyber Monday and Black Friday involve thousands of independent marketplaces, retailers and merchants as well as the participation of scores of service providers like credit-card and delivery companies. Yet last year, Alibaba on 11.11 more than doubled the combined online sales of Cyber Monday and Black Friday–and all transactions were generated and completed within Alibaba’s ecosystem of partners. This ability to scale up for 11.11 is a clear demonstration of Alibaba’s capacity to extend its e-commerce ecosystem model to consumers and businesses on a global scale.

Innovation and infrastructure doesn’t mean much if shopping isn’t fun. Alibaba is making it more fun than ever, through efforts such as its interactive 11.11 warm-up gala celebration broadcast, which is likely to be viewed by more than 100 million people. Alibaba is also showing that virtual reality shopping is not sci-fi. For the sale the company is launching the world’s first end-to-end virtual reality shopping experience, in which the entire transaction, from browsing, selection and payment is completed within VR stores from Macy’s, Target, Costco and others. No need for an expensive headset.  For just RMB1 each, 150,000 cardboard headsets that can be connected to smartphones will be available on Taobao Marketplace.

Alibaba is demonstrating that a physical store isn’t needed to create an experience consumers crave. This, along with other innovations that will soon be on display, is what the future of retailing looks like. You’ll be able to get a taste on Nov. 11.