With only a few days left before Monday’s 11.11 Shopping Festival, China’s 24-hour online shopping blowout that eclipses Cyber Monday in the U.S., participating merchants, package-delivery companies and event host Tmall.com are scrambling with final preparations to enable them to cope with the looming tsunami of shoppers.
Tmall, China’s largest business-to-consumer shopping website, expects 20,000 of its merchants to slash prices up to 50 percent this year, attracting tens of millions of bargain hunters. While Tmall parent company Alibaba Group is declining to estimate what the Nov. 11 festival’s sales volume will total this year, company officials have suggested that the value of transactions on Tmall and Taobao Marketplace could top RMB 30 billion ($4.9 billion), up more than 60 percent from the RMB 19.1 billion sold on Nov. 11, 2012.
For merchants, handling a huge spike in customer traffic, processing transactions and delivering the goods is one of the biggest challenges of the year. To get a sense of just how big that challenge can be, Alizila conducted separate Q&A interviews with Brian Lee, chief executive of China handbag distributor Sino Supreme, and Daphne Lee, director of Taobao’s International Business.
First up is Brian Lee of Sino Supreme, the licensed distributor of Elle branded handbags in China. Lee’s Elle Tmall store is participating in this year’s 11.11 shopping festival for third time. Last year his trendy handbags made Sino Supreme the top seller in the handbag category on 11.11. This year, Lee expects to double last year’s results:
Alizila: What’s involved in ensuring sales go smoothly on 11.11?
Brian: We learned last year that the bottleneck issues were at the call center and the logistics level. For example, on the logistics front on an average day we take care of about 200 orders. This year during 11.11, we expect to do about 40,000 orders. That’s 200 times our normal capacity.
We had to start three to four months ago by working with our outsourcing partnerships to find warehouses and to package up 30,000 boxes with our top 30 products so all we need to do is to print the customer’s name and tack it onto the box. A lot of the work is really already done.
What about your call center, you said there’s bottleneck there too?
Normally customers have a lot of questions so they use instant messenger to ask questions about the quality, size and material of the bags. Usually that’s fine, our call center representatives can handle the normal volume of queries. But on Nov. 11 it’s impossible. We expect 200,000 to 400,000 customers viewing the website at the same time and we only usually have only eight to 10 representatives. For 11.11, we hired temporary staff to boost our call center numbers to 20-25 and trained them over the past 30 days to answer queries. We also put up a question and answer section about 11.11 to avoid the situation where there are 400,000 people asking 20 representatives questions.
Watch Brian Lee as he explains how his company prepares for 11.11
Alizila: What are your expectations for this year?
Brian: The first 11.11 we did 2 years ago, we made only RMB 1.2 million. Last year we did roughly 10 times that amount and made about RMB 12 million in sales. This year we are expecting the number to double to RMB 24 million. After last year’s 11.11, my e-mail went out at midnight November 12 on how we are going to prepare and do better in 2013. When we won the top spot in the handbag category for 11.11, we were already discussing how we are going to defend it this year. We prepared a lot by working with our design and marketing teams early in the year and we placed our orders with the factory back in June. To do 40,000 orders, we prepare about 100,000 items to be sold.
Do you have any tips for other merchants looking to hold a successful 11.11 sale?
We are very aggressive in terms of [selling through] Tmall and we understand that for Tmall it’s a slightly different clientele. Tmall customers are younger, they like brighter colors and their purchasing power is a little less than the older crowd who go to malls. So for 11.11, we developed an entire set of merchandise for this younger, more tech savvy and price-sensitive crowd. The online customers tend to like brighter colors like pink, fuchsia and mango. They also want more functions like pockets and zippers, so we made changes to our linings and compartments to reflect that.
For pricing, we take out all the multi-tier distribution costs and the rental costs so we are able to pass the savings to consumers and offer them a better value proposition for the product.
Alizila also spoke with Taobao’s Daphne Lee about her effort to generate 11.11 buzz with the shopping website’s users in Hong Kong, Taiwan and Southeast Asia markets:
Alizila: The 11.11 festival is primarily a mainland China event, how is Taobao extending the event to international customers this year?
Daphne: This year, we started payment promotions to run in some markets. For example, in Hong Kong we teamed up with international credit card providers on special rebate promotions. When shoppers use their international Visa or Mastercard to complete purchases, they will get a rebate incentive. In Southeast Asia, we partnered with Mastercard so that if you spent RMB 50, you will get a RMB 10 ‘red packet’ or rebate. This promotion period is not just for 11.11, it will last till the end of the year.
International shipping can be somewhat more complicated than domestic. How will customers from markets outside China be able to receive their 11.11 goods?
We recently rolled out a special logistics service for Taiwan whereby if you go to a 7/11 or a Family Mart convenience store, you can pick up the items you have bought on Taobao. Family Mart has about 2,900 stores participating in this project while 7/11 has about 4,800 stores participating.
This year, we also rolled out a parcel-forwarding service for Hong Kong, Macau, Taiwan and Singapore that simplifies and lowers the cost of delivering products from China. We have more responsibility on this front to ensure the quality of the end-to-end service. We have been discussing with our parcel forwarding partners to confirm there is sufficient warehouse capacity and courier capacity, and to ensure all systems are working.
How did your team raise awareness of 11.11 in overseas markets?
Hong Kong consumers are the savviest of the international Taobao shoppers. They know how to prepare for 11.11, for example to top up their Alipay in advance, to put the items they want into their shopping cart days before 11.11, and to prepare logistics for the event. Last year, it was the first time we rolled out 11.11 in Taiwan, and we found that Taiwanese were very interested in the sale but lacked the expertise to participate in it as many of them only found out about the sale on Nov. 11 itself. So while last year there were plenty of Taiwanese window-shopping, this year we think they will be better prepared.
This is the first year we are launching 11.11 in Southeast Asia. For each of these markets we have a specific 11.11 landing page. We specially looked for [China] merchants who would take orders from Hong Kong, Taiwan and Southeast Asia and advertised them on these landing pages. Out of the 20,000 Tmall.com merchants participating in the event, about 1,000 of them are selling internationally. These are merchants who want to learn to sell into other markets and believe that their items have a competitive advantage. We are pretty confident that the overseas business will do well during this year’s 11.11 because we have spent a lot of effort to educate the different markets and let consumers know how to efficiently shop on Taobao.