11.11 Singles Day Predictions from Hot Pot China

11.11 Singles Day Predictions from Hot Pot China

This coming Monday is November 11th. For China this means only one thing - retail.

11.11 is Singles' Day and marks the largest online shopping event globally. Last year, Alibaba's Singles' Day saw sales of more than $30.8 billion (£23.9 billion) in just 24 hours, with the first billion in sales completed within 1 minute 25 seconds.

For comparison, Amazon's Prime Day sales reached $4.2 billion (£3.3 billion) over its entire 36-hour online sale. Alibaba's Singles Day eclipsed this mark just 10 minutes into their online event, making it 7x larger.

Even other famous retail days fall short. In 2018, sales on Black Friday reached $6.2 billion (£4.8 billion) and Cyber Monday rose to $7.9 billion (£6.1 billion), both of which are dwarfed by Alibaba's event.

Now well established in the minds of global retail brands looking to reach a Chinese audience, what does 2019 hold in store? The team at Hot Pot have looked at consumer trends, Alibaba's strategic initiatives and crunched some of this year's Tmall pre-sale data to compile a list of predictions.

Hot Pot China's predictions for Singles Day 2019.

  1. Premiumisation: Luxury brands will be more present and able to hold their premium positioning without excessive discounting. This will be a big win as Tmall have been keen to upgrade, with the launch of Tmall 2.0 (improved brand presentation capability on flagship stores) and a focus on Tmall Luxury Pavillion.
  2. A shift from apparel to cosmetics: it is widely believed that female fashion, long a mainstay of sales on Singles' Day, will be eclipsed by cosmetics sales in 2019. 3 days out from the festival itself, pre-sale stats show Estee Lauder with over 520,000 units sold of its Advanced Night Repair eye cream, with over RMB 1 billion in total pre-sales ($150m).
  3. Live-streaming boom continues: Live streaming saw a major rebirth in 2019 and will be highly prominent during the festival, with KOLs and KOCs (Key Opinion Consumers) inspiring purchases (and likely pocketing commission to fuel their own spending). Tmall is increasingly encouraging global brands to involve their superstar brand ambassadors in. Kim Kardashian partnered with Chinese influencer Viya for a livestream that drove pre-sale of 150,000 units of her KKW perfume brand in a single day
  4. Lower tier consumers: With incomes rising, growing sophistication and an increasing interest in a wider array of brands, the proportion of sales coming from lower-tier consumers is expected to rise significantly. Tier 2 and beyond is a major battle ground for Alibaba where impressive logistical infrastructure for eCommerce offsets consumers' reduced access to physical retail. Savvy global brands are on top of this trend and will be targeting on a hyper-local basis
  5. Going green(ish): Alibaba have been making a lot of noise around building a more sustainable footprint for the festival. We expect some movement her and plenty of PR fanfare from Alibaba around sustainable practices, but with more than a billion packages shipped, how much packaging will be generated?
  6. Returns: to compound the sustainability point above, Tmall's newly-implements returns policy will lead to higher volumes of deliveries sent back to distributors. Based on polling of our network, many fashion brands expect to see returns close to 50%.
  7. A Rival to Chunwan? With Taylor Swift due to appear at this year's Single's Day extravaganza broadcast online and on TV, the event is increasingly similar to the chunwan. A late night is in store for all as many will be gathering, watching the show, meeting and eating with friends poised to convert their presales at the stroke of midnight on Sunday. Could 11.11 become a cultural rival to the chunwan - the traditional Chinese new year's eve gathering?

At Hot Pot China we partner with forward-thinking brands on their China activity. As part of our strategic advisory work we help map out benefits of platform partnerships and digital marketing initiatives. We guide our clients in maximising ROI from their short, medium and long-term marketing activity in China.

Contact Hot Pot China here to discuss how our team of China specialists can help realise greater value in your brand, digital and eCommerce initiatives.


NARS Orgasm Collection: Shanghai O2O Case Study

NARS Celebrates Its 25th Anniversary in Shanghai

On 10th September 2019, the Shiseido subsidiary cosmetic brand NARS launched its 25th-anniversary celebration in Expo Park, Shanghai in collaboration with Tmall Little Black Box (天猫小黑盒).  

Little Black Box is an official channel for launching new products on Tmall whereby brands gain exposure for their products in return for running an offline event to cross-promote. The NARS event marked the official release of four limited edition products from the NARS “Orgasm” collection in China.

The Global CEO and Chief Growth Officer from Shiseido, Mr Marc REY, attended the event and unveiled the four limited edition products. Chinese singer Liangying Zhang, Actress Bridgette Qiao, Jinna Fu from Rocket Girls 101 as well as major beauty KOLs and Chinese media representatives were invited to share the launch moment with NARS.

The exhibition was shaped by six immersive, interactive beauty spaces - brand, makeup, highlighter, blusher, couture plate and lipstick - and attracted continuous footfall to the site throughout the launch day. Importantly, prior registration and time slots were booked via a WeChat mini-program with attendees required to provide their name, city, phone number and time slot before being given a unique QR code to be presented for entry. 

Upon entry attendees received a special card that enabled them to collect stickers from each of the interactive spaces. As a reward for collecting all six they were able to redeem a NARS exclusive package at the end of the exhibition. To drive offline interaction there was also a claw crane arcade machine for participants to try and win exclusive NARS prizes. Lastly the exhibition featured a Tmall-integrated vending machine where attendees could scan a NARS Tmall QR code to place online orders and then collect the products immediately on-site.

In addition to the continuous footfall to the site, the event generated significant engagement across Chinese social media platforms.

  • The campaign launch post about the event (featuring KOL UNINE) had 22,665 shares and 7,121 comments
  • The brand-owned hashtags #NARS25# and the more risqué #愉悦蔓延美到颤抖# ("spreading beauty to make you quiver") drew over 1.2 million discussion comments respectively

Overall The NARS 25th Anniversary campaign and exhibition is a prime example of how innovative global brands are thinking holistically by providing stand-out experiences offline with the goal of reach and capturing high-value target audiences online.

Key Considerations from Hot Pot:

  1. NARS have created a truly immersive campaign to commemorate a key milestone in the brand’s history in China. Omni-channel integration and consistency of messaging across channels is fundamental to reaching and engaging target audiences in the short and long-term
  2. The digital sign-up function is significant from a data-capture and retention perspective. The value of a follower that has opted-in and experienced the brand first-hand far outstrips the more casual social browser (e.g. acquired through paid ads only). These high-value audiences can be leveraged as early-adopters, driving organic messaging for future campaigns.
  3. Physical, offline initiatives remain hugely important to the consumer's user journey, even as they evolve to be more experiential, creative, and holistically integrated with online. Global brands headquartered outside of China may feel that they can manage a single-channel eCommerce presence from arm’s length, but they miss a key opportunity to delight their audience. Even if brand advocates cannot attend in person, they can relive offline experiences through other's social media posts. Brands may face questions of authenticity in China if their competitors have a greater or more meaningful offline presence than they do.
  4. Chinese consumers are increasingly craving a wider array of specialised products within the beauty category and are eager to build a depth of knowledge around the brands and products that they adopt. This deeper affinity was facilitated via the six immersive and interactive spaces presented at the NARS exhibition and is a key to driving loyalty and repeat purchase.

 

At Hot Pot China we partner with forward-thinking brands on their China activity. As part of our strategic advisory work we help map out benefits of platform partnerships and digital marketing initiatives. We guide our clients in maximising ROI from their short, medium and long-term marketing activity in China.

Contact Hot Pot China here to discuss how our team of China specialists can help realise greater value in your brand, digital and eCommerce initiatives.


What Next for Little Red Book?

What Next for Little Red Book?

Little Red Book, one of China's foremost UGC (user-generated content) platforms, recently made a return to the Android store after been taken down from major app stores in China in August.

The brand and product recommendation platform remains absent from the all-important Apple Store and it is believed that the app was removed due to inappropriate content. A Weibo topic/hashtag #小红书疑被各大安卓应用商店下架# (#Little Red Book removed from major Android stores#) subsequently received more than 300 Million page views and 19k comments. Little Red Book responded quickly by launching a comprehensive investigation to rectify the alleged content issues and made an official announcement on Weibo on 1st August.

According to NEXTTECH, there has been speculation that Little Red Book’s content issues might have started in 2018 as the platform started raising capital, driving an urgent need to demonstrate increasing engagement with a knock on effect on monetisation and potential revenue.

So often in China this pressure can lead to previously high-quality platforms diluting their loyal (and genuine) user base with poorer quality content, often driven by bots. As a reference, travel platform Mafengwo was recently taken to task over allegations that it fabricated up to 85% of its location-based reviews.

Little Red Book

 

In March 2019, Little Red Book had reached 220 million users (85 million monthly average users). Pressure from investors to start monetising the LRB engaged user base will have been exacerbated by revenue reports from other UGC platforms, such as Kuaishou 快手 and Douyin 抖音. 

Consequently, there appears to have been a shift in direction, from content to a more commercial focus. What effect has this had, and what does this mean for brands considering a presence on the platform?

Monitoring Content Authenticity

Little Red Book has developed authority as the go-to platform to research purchases via authentic product reviews, chiefly in fashion and beauty sectors. 

According to research by ZP Partners, 68% of premium shoppers learned about their newly-purchased fashion and beauty products via Little Red Book, compared with just 53% citing Taobao/Tmall/JD and 37% for Weibo as a source of influence.

Now however, this place of authority is under threat, as Chinese media have continuously reported on fake fans within the Little Red Book platform, as well as posts on restricted, forbidden, and fake products. Additionally, Hot Pot's own research has unearthed numerous third parties on QQ and Taobao offering pay-for-play review posts for Little Red Book.

To retain credibility and authenticity, Little Red Book has recently established an internal risk assessment and anti-fraud team to audit content, leveraging pattern recognition and machine learning technology. A 500-person strong team deletes an average of 4,285 fake posts per day, 18.6 counterfeit accounts per day, and 168 fake likes every 5 minutes. In total, 90,000 posts related to tobacco and other medical products have been removed. However, this doesn’t appear to have been enough to avoid the censors.

With its origins as an interactive content sharing community, Little Red Book now is facing a genuine challenge over the quality of its content and risks losing users’ trust.

The Struggle to Monetise

Global-to-China cross-border eCommerce started in earnest in 2014, the same year that Little Red Book -- only established one year earlier - launched its own cross-border eCommerce business. From a simple content seeding (种草) community, the platform started to build a seamless route for users to make purchases.

However, even with its significant user base, Little Red Book has perennially struggled to monetise its eCommerce business. With only 7.3% market share in cross-border in 2018, Little Red Book has been unable to break into the ranks of more dominant cross-border eCommerce giants, such as Kaola, Tmall HK and JD Worldwide, which have a combined market share of 64.3%, according to iResearch.

The majority of users currently search for and learn about products on Little Red Book before completing purchases on other platforms.

Based on the platform’s positioning and traditional user behaviour, it is widely believed that Little Red Book should focus its monetisation efforts on further developing its suite of brand marketing and advertising services, instead of pivoting to be an eCommerce platform. 

Key Considerations from the Hot Pot Team:

  • Little Red Book’s current challenges are not uncommon for Chinese platforms at this stage of development - the music app NetEase 网易云音乐, as well as popular video sharing platform BiliBili 哔哩哔哩 and short video social channel Kuaishou 快手 have all been taken down from app stores previously, only to remain fairly consistent in terms of user base
  • Challenges around content authenticity are down to the platform to solve, however when leveraged in the right way Little Red Book can prove particularly fertile ground for beauty and fashion brands to reach and engage target consumers with content, UGC and influencers linking out to external eCommerce conversion channels
  • As with all potential platform partnerships brands must dig beyond the vanity metrics to understand the end value delivered. Are you measuring activity based on falsely inflated impressions, or on quality traffic that truly reflects meaningful engagement with your target audience?
  • Little Red Book’s eCommerce offering (Red Mall) is as yet relatively unproven and among Hot Pot’s network few brands have seen meaningful returns on investment. The pressure to monetise has produced a model that currently lacks credibility and a suitable supporting infrastructure.

 

At Hot Pot China we partner with forward-thinking brands on their China activity. As part of our strategic advisory work we help map out benefits of platform partnerships and digital marketing initiatives. We guide our clients in maximising ROI from their short, medium and long-term marketing activity in China.

Contact Hot Pot China here to discuss how our team of China specialists can help realise greater value in your brand, digital and eCommerce initiatives.


Alibaba and Double 11 in 2018: Beyond the Numbers

Alibaba and Double 11 in 2018: Beyond the Numbers

This November saw record sales of RMB 213.5 billion (approximately GBP 23.8 billion) from China’s Double 11 – a shopping festival that has become a major feature of the Chinese commercial and marketing calendar for domestic and international brands alike.

Much has been written regarding the mind-boggling total transaction value, however Hot Pot’s insight team in Shanghai have looked beyond to identify three key takeaways for brands looking to build understanding and maximize value from the 11.11 shopping festival.

 

Key Takeaways: 

  • Beyond the Day: A common misconception is that Double 11 takes place on a single day. The reality is that the festival begins with pre-sale and add-to-basket in late October and brands are increasingly choosing to extend their promotional offers beyond the 11th November. Given that the length of the festival continues to grow, brands must develop their strategic plan well in advance to capitalise and consider appropriate budget allocation and activations before, during and after 11th November. Typically any non 11.11 related sales will taper off sharply from mid October and this needs to be factored into quarterly sales forecasts.

  • Beyond the Discount: Tmall and the Double 11 festival have developed a reputation for heavy promotion and discounting. This year Hot Pot saw notable campaigns from brands, especially in the luxury sector, that provided consumers with an immersive and engaging experience to counteract this need to discount. Exclusive and limited-edition products hold huge appeal and were able to drive traffic and conversions demonstrating that brands can succeed online in China without purely discounting aggressively. Additionally Tmall’s increasing arsenal of gaming, voting, and user-generated content mechanisms can be leveraged to good effect and should be considered key elements of seasonal promotional plans.
  • Beyond Tmall: Platforms from across the Alibaba ecosystem are playing an increasingly important role in the festival. For example, Eleme (food & goods delivery services), Fliggy (travel & booking), Hema (O2O retail in fresh groceries), Xianyu (second hand marketplace) and Damai (ticketing platform) are all leveraging the increased 11.11 consumer interest to drive sales. Additionally, a new Tmall initiative introduced offline activations in 12 cities covering 100 high-performing retail districts areas and 180,000 offline stores. Users were able to use their Taobao and Tmall apps to scan 11.11 barcodes at physical retail locations to receive on-the-spot discounts and coupons.

  • Brands including L’Oreal, KIMISS and Beats were key participants looking to leverage the retail opportunity offered by the offline activations. As consumers increasingly look for a seamless brand experience online and offline it is vital that an integrated omni-channel strategy is implemented and this can now be factored in to festival-based planning.

(image credits: Alizila, Fortune. Retail Week)


About Hot Pot

Hot Pot continually monitors the rapidly evolving face of retail in China. We plan and execute omni-channel strategies for some of the world’s leading retail brands.

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