Alizila’s Julie Huang: For our final recap of this year’s Double 11, we’ll review some of the tactics with Danielle. Her latest report is: Lessons from Double 11: How Brands Adapt their Offering Across a Consumer Purchase Journey to Win. Danielle, how many Double 11s have you been through?
Gartner’s Danielle Bailey: So I’ve been covering the China market for almost a decade. So I’ve been looking at it for all that time, but the first time I got to see it firsthand on the ground was in 2017. At that time it was really getting a chance to see Singles’ Day for the highly interactive event that it is. We’ve always talked about, ], that shopping in China is a contact sport and really got to see this firsthand. It was at this Double 11 where I first saw this idea of sort of gamification come to life where they were dividing on stage at this gala that I was attending inside a sports arena. They were inviting teams to divide themselves into two and it was the job of the audience, both inside the arena as well as folks who were watching online and in home to pick which team they thought was going to win.
And then if they correctly pick the right team, they actually unlocked more discounts and watching that happen real time was fascinating. And what we’ve seen is actually the gamification has become sort of the standard underpinning of the Double 11 holiday. It’s really sort of the driving mechanism to get consumers, to drive traffic to your Tmall destinations as well as to drive conversion. We’ve seen across industries, it’s become really standard to either require daily check-in in order to get introduced into a lottery or to have people actually refer the deals that are offered by your brands to their friends for more opportunities to participate in these lotteries that will unlock additional discounts or gifts. Gamification has become more sophisticated.
JH: The Chinese consumers are ready to shop and to spend. Which brands impressed you with the way they reached the Chinese consumers?
DB: Obviously, one of the hallmarks of this year was the idea that there were going to be two sales periods for Singles’ Day, which was the newest element that’s always added. Each year, Singles’ Day adds a new twist and turn. We also think about Singles’ Day as this period where we can start to understand, you know, what are the latest innovations in terms of digital and e-commerce in the market. And a brand that was really smart about leveraging this new two phase period was Estee Lauder. So Estee Lauder for the first time this year is finally taking the crown as the top beauty brand away from the L’Oréal portfolio. They were actually quite smart. We had thought that during the first wave things would be rather slow, but all the big brands everyone came out with guns blazing in the first wave. Estee Lauder actually got a jump on that and was actually activating even prior to the beginning of the official Double 11 sales period.
So you see them starting with this nine-day celebrity livestreaming where they are bringing the big guns to the table, elevating the sort of entertainment aspect of Double 11 and the branded entertainment aspect that livestreaming has morphed into. They culminated this with their top ambassador Yang Mi appearing in a livestream that had more than 3.6 million views. What they also did that was very smart is they used the first sales period as an opportunity to set up the second sales period. During the first presale period, they were very active about trying to incentivize the creation of user generated content. They worked very aggressively on the platform, Red or Xiaohongshu which is a female driven platform that’s very popular in the beauty space in terms of where people go to learn about new products and trends.
This platform is a huge traffic driver to Tmall and is more and more actually integrating into the Tmall ecosystem. So on this platform, they created campaigns, incentivizing people to actually share unboxing videos and pictures and content of the items that they actually purchased during the pre-sale. What they were able to do is then take all these conversations and energy around that and use that to educate consumers who might not have purchased in the first pre-sale period and help to boost and drive sales in the second period. They also repurposed a lot of this user generated content that had been created by consumers directly into the Tmall ecosystem.
Word of mouth in China and users telling other users about what’s the hot deal, what’s the great product is actually the biggest driver of sales in China. This time utilizing a celebrity campaign that was encouraging people on social media to share the purchases that they’ve made using this #Estee Lauder’s Double 11 products. They’re going to not only benefit from all of the energy that’s been created during the Singles’ Day period, but this helps, even after Singles’ Day.
A lot of focus is given to how much sales people generate during Double 11. But we’re constantly telling people that as important, is the amount of customer data that you’re able to harness during this period, as well as the amount of user generated content, the word of mouth that you’re able to drive.
JH: It’s amazing that Estee Lauder did this, and they’re also veterans to Double 11. Are there any smaller brands or new brands that entered this year impressed you?
DB: First time this year luxury brands participated in Double 11 in earnest, which brings an entirely sort of new approach to Singles’ Day. Singles’ Day is often thought of as this highly promotional period and luxury brands are really taking that and turning it on its head as they really try to preserve their brand integrity. And so we’ve seen luxury brands really lean into some interesting things including the release of special editions, several luxury brands actually moving up their Christmas collections to coincide with Double 11 which really signifies how important they see this market and the Chinese consumer to their sales and their brands as a whole. We’ve also seen luxury brands leaning into livestreaming, both using top tier livestream influencers like Austin Li and Viya, but also releasing their own very high production livestreams that go beyond the traditional transactional livestreams that we’ve seen and really are about building the brand and extending the brand experience and creating a luxury experience directly within Tmall.
The utilization of things like experiential gifts, services and offering coupons and gifts, we see instead are luxury brands providing giveaways, whether that be things like branded products or merchandise, things like computer bags or card bags, even like in-home scented candles from a brand like Piaget. Instead of offering them like services, which included things like interest free installment payments or the ability to bring their products for tailoring for free. This is really transformative and I think is going to be illustrative for other brands and other industries as well.
JH: Luxury brands really leaned into this Double 11. Did that surprise you given the mood of this year with the pandemic?
DB: The pandemic has actually pushed luxury brands in a way that they haven’t before. One of the big stories of 2020 is that Tmall has really reached its tipping point with luxury brands that many of them now from all the major luxury houses have really leaned in. The watches and jewelry space specifically, has gone almost all in on Tmall. And if you were talking to a lot of these brands a year ago, many of them would still be very wary about the marketplace or online e-commerce experience because of the, their perceived threat around their brand and their incorrect notion that high-end spenders don’t exist, within these platforms. And so the fact that that’s been a complete evolution if you look at brands like Cartier. I remember having a conversation with someone very high in the marketing organization at Cartier almost two years ago who was adamant that they would never be on Tmall.
And now when we look at Cartier, they are one of the most active brands on the platform and definitely among the luxury set. After launching into the platform earlier this year, they continue to activate doing everything from Heybox launches to releasing products. Around Double 11, they have really demonstrated what it looks like to have a luxury experience on Tmall. They’ve used the livestreaming in a really interesting way. So as you mentioned, people think about, oh, you can’t really translate, you know, the look and feel or seeing, or examining luxury products or trying them on into the online space. And so what Cartier has done is taken something that they’ve done really well all along. They’re known for their large scale exhibitions and offline events that are targeted to VIP consumers and to support the release of their SUR NATUREL collection.
They hosted one of these very large elaborate offline events, but what they did really smartly is they uses this event as a way to capture a ton of content. So huge numbers of celebrities, and VIPs attend these events. They embedded that pre-produced content into livestream that they hosted during Double 11. This livestream was hosted by celebrity, It also included like jewelry experts. They were able to not only just show the product, but provide like really close up views of the jewelry product to give you again, a real sense. And we’re talking about product worth hundreds of thousands of dollars. they really helped to show the elevation and evolution of what it looks like to be a luxury brand inside of Tmall.
JH: What was the driving force of that tipping point for luxury brands?
DB: I definitely think the pandemic was an accelerant, but I also think that luxury brands have had to take a step back and ask who is our customer? And their customer are Chinese consumers and within that, it’s really Gen Z Chinese consumers. And then, so when you think about where are, how can we capture them? It is very difficult in the Chinese digital ecosystem to drive traffic to brands’ own destinations. And what Tmall offers is an aggregation of where people are already spending a tremendous amount of time, particularly as Tmall evolves and becomes more content rich, but also where they’re already spending a lot of money and particularly Gen Z consumers and young consumers who account for tremendous amount of growth.
Chinese consumers are expected to account for almost half of all luxury sales as early as 2025 and probably sooner given the post-Covid effects. They have to turn to Tmall because it is the natural place where these consumers already exist. So Burberry is a brand that has been on Tmall, was the first luxury brand lever to join Tmall. There also have been one of the brands that have adopting loyalty within Tmall. You actually don’t typically see luxury brands pursuing loyalty programs on their other platforms. But within Tmall, most luxury brands are actually utilizing loyalty as a mechanism to drive repeat purchase and visits. And Burberry’s loyalty program is super sophisticated including multiple tiers, a lot of experiential rewards. It continues to be a brand to watch for sure.
JH: On the subject of loyalty programs, was this a strategy that was quite popular for this Double 11?
DB: Yes. And this is actually another place where gamification rears its head. Shopping as a sport in China. And, Singles’ Day is the Super Bowl. Loyalty is a way that not only for brands to capture a ton of customer data, but also reward VIP consumers. Fila is actually a good example that provided some sophisticated mechanisms and the use scarcity and gamification as a way to get their followers to constantly engage. They offered these daily shopping deals in a limited quantity available only to their members. They also provided these daily tasks that they would ask their members to do where they could also earn additional points that they could redeem. Tmall ecosystem is becoming more and more sophisticated. What we’re seeing on the luxury side is loyalty is becoming experiential. Instead of these things like coupons, what they’ll offer things like invites to VIP events or branded gift.
JH: In your report you pointed out that for Chinese consumers, packaging really matters. Can you share some interesting examples from this year’s sale?
DB: Absolutely. Packaging has always been important in China. It’s a way for self-expression, also people like to actually display their products in their home and so you have a unique, rich type of packaging that makes it a collection piece. It incentivizes people to purchase.
Brand collaborations are a huge driver of new product introductions into the market and a way to generate buzz and sales. One example is Kotex, the feminine hygiene product that collaborated with Kakao Friends, which is the South Korean messaging app with emoji characters and cartoon characters. This is a way to target and reach Gen Z consumers. It provides this uniqueness and specialty that actually drives consumption.
Where we see this is becoming more sophisticated is in the beauty space. Many brands have actually launched a unique packaging into the space for Double 11. Lancôme is a big example. They took their hero product which is a very popular toner and collaborated these bottle tops that look like popular emoji characters of monkeys covering their mouth. It actually became super popular. They used the blind box concept. This is another thing that’s become a huge trend, particularly with Gen Z where you purchase something and you don’t know exactly what you’re going to get inside. There was a collection of these four emoji edition. The monkey one was the most popular and became super popular. And because they’re using this blind box, it actually incentivizes people who don’t get the monkey the first time to possibly try to purchase again because they want to get it, or they want to own the full collection of all four of the limited edition. So this has become a really a way for brands to distinguish themselves during this time, create a ton of energy and particularly target young consumers.
JH: Livestreaming was a must for 11.11. What new trends did you see there for this Double 11?
DB: Livestreaming has just become more and more important in the Chinese e-commerce ecosystem and specifically directly within Tmall. So what we’ve seen is really the evolution of livestreaming, where it’s gone from being transactional, interactive sessions to being more about brand building. So this includes the things like cloud happy hours that are hosted by celebrities and influencers, which included various games and interactive opportunities or the livestream concerts that happen directly within Tmall. All of the top tier celebrities and performers that draw us that have huge audiences. We’ve actually seen, on the transaction front, brands think about how they can leverage these livestreams not only as a way to provide heavy discounts, but also to provide a way in which consumers can really engage with them.
JH: Do you think the China’s style of livestreaming and e-commerce will ever catch on here in the U.S.?
DB: Absolutely. We’ve actually started to see this happening already. Brands like Tommy Hilfiger and Ralph Lauren who saw success of doing in-store livestreaming by Tmall in China during the Covid period, have directly translated that concept to the West hosting in store livestreams, Ralph Lauren, using Chance the Rapper to livestream from their store in Chicago, not only to provide a concert, but also to show off some of their latest products. Tommy Hilfiger as well, taking influencers in the store environment to do livestreams and introduce new collections. Tthe lesson that they learned from China is that livestreaming, is not only as a powerful tool for online sales it’s actually a powerful tool to incentivize people to visit stores. Often after they’d hosted in-store livestream, you see foot traffic spike.
We see brands in the West adopting that as well as a way to try to navigate through this crisis. It also should be noted that Amazon not surprisingly who pays a lot of attention and takes a lot out of the Alibaba playbook has also emphasized livestreaming within their platform. It is not as interactive or as engaging as in China. Definitely a lot of Western brands are learning from the China livestreaming experience.
JH: What does it take for brands to go through digital transformation? What do they need to do?
DB: When people in the West hear digital transformation, it means what’s happening right now. So the fact that e-commerce in the last six months has grown as much as it has in the last six years means that people in the West are undergoing radical shifts in terms of how they’re approaching online. Many brands and retailers who didn’t have omni-channel capability are now a must have in the post-Covid world.
When I think about digital transformation in China, actually think of it a bit differently. It’s not radical. It’s like ongoing. It’s constant. We often think about the China speed and the cycle of innovation in China being something that’s continuous. And I think that’s been a difference in the West. It’s taken something as drastic as a pandemic for many Western brands to get their act together digitally. And I think that digital transformation is an ongoing part of the muscle that you have to have to be successful in China.
JH: As we look ahead for 2021, what’s your assessment of Chinese consumers for next year?
DB: So Chinese consumers have proven to be unflappable for quite some time. This recent Singles’ Day confirms that the consumer confidence remains strong. I think going into next year while there may be that the Chinese consumer will feel very good about where they are relative to the rest of the world, as everyone else continues to muddle their way through this crisis.
JH: Luxury has finally embraced e-commerce in China and any thoughts on other categories that will go big on China e-commerce next?
DB: Two of the categories that I’m paying a lot of attention to right now is automotive and real estate. These are two industries that have been heavily impacted by the COVID crisis. The lockdown and people ‘s inability to access offline during that period. Whether it’s with the launch of like Tesla into the Tmall ecosystem earlier this year, or just the sheer amount of activations from automotive brands within Tmall is something I’m paying a lot of close attention to. I think there’ll be more of these non-traditional industries that will continue to sort of embrace e-commerce.
JH: How does China serve as a bellwether for what is to come in global retail?
DB: I think China is an effective crystal ball for what’s also to come into the West. And so paying attention to what’s happening in China is not important just for growing a China business, but it’s important for growing your global business as we’re seeing the radical digital transformation that’s happening in the West, looks a lot like what we’ve seen in China for the past three years.