Countdown to Singles’ Day 2017 Part 6: A Big Opportunity for European Retailers in China

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KEY POINTS

In this report, part of our Singles’ Day 2017 report series, we show how European retailers approached Singles’ Day in 2016, how their sales grew during the shopping festival and how they are preparing for this year’s event. 

  • A number of European retailers that participated in Singles’ Day in 2016 saw their sales grow at triple-digit percentages versus the daily average recorded one week before the event.
  • Despite the significant sales growth achieved by international brands during last year’s 11.11, Singles’ Day remained a better opportunity for domestic retailers than for overseas companies, a number of which saw stronger sales growth in China during Black Friday.
  • The expected scale of 11.11 this year, combined with increasing competition from domestic players in cross-border e-commerce, should encourage a stronger participation by international retailers in Singles’ Day in 2017.

An Opportunity for European Retailers 

Singles’ Day—officially known as the 11.11 Global Shopping Festival—is the biggest online shopping day in the world. The brainchild of the Alibaba Group, the shopping festival was first launched in China in 2009. Singles’ Day represents a big opportunity for European retailers with a presence in China.

In this report, part of our Singles’ Day 2017 report series, we show how European retailers operating in China approached Singles’ Day in 2016, how their sales grew during the shopping festival and how they are preparing for this year’s event. We include insights from Azoya—a cross-border e-commerce service provider which partners with international retailers wanting to expand their businesses in China—on how some of the retailers it collaborates with are approaching 11.11.

 

1) Triple-Digit Sales Growth 

A number of European retailers that participated in Singles’ Day in 2016 saw their sales grow by triple-digit percentages versus the daily average recorded one week prior to the event, according to Azoya. One such company, e-commerce retailer Feelunique—which entered the Chinese market in 2015—saw its sales of beauty and personal care grow by 200%–250% on Singles’ Day 2016 versus the daily average.

Last year during Singles’ Day, Feelunique offered discounts of 20%–22%, and launched its 11.11 promotional initiatives on social media, advertisement affiliate programs and shop guides, which are deals websites browsed by consumers to find deals or new product information. In the figure below, we show these figures from Feelunique, together with those of two other companies that collaborated with Azoya.

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2) Singles’ Day versus Black Friday in China

Despite the significant sales growth that European retailers recorded during Singles’ Day 2016, 11.11 generally remained a better opportunity for domestic retailers than for overseas companies. By comparison, during Black Friday in 2016, some European retailers saw sales growth of over 1,000% compared to the average, according to Azoya. 

Black Friday as a shopping event has started to gain popularity in China. Last year, for example, Tmall Global—Alibaba’s cross-border e-commerce platform—partnered with several US retailers including Macy’s, Costco and Target to launch the “Same Products, Same Time, Same Price, Same Black Friday” campaign, which gave Chinese consumers the opportunity to take advantage of the same in-store promotions available to US consumers during the sales event, according to Alibaba news portal Alizila.com.

The success of international retailers during Black Friday is explained by the following factors:

  • International retailers tend to launch heavier promotional activities during Black Friday—in terms of coverage, scale or discount—compared to Singles’ Day, as the event has a stronger focus on overseas brands and retailers.
  • Chinese customers know that they can get better deals during Black Friday for cross-border shopping, and as such, they tend not to spend as much for cross-border shopping during Singles’ Day.
  • Marketing costs are significantly higher during 11.11 compared to for Black Friday in China as there is a huge volume of local sellers that will advertise and promote their campaigns during Singles’ Day.

These factors contributed to limit the involvement of international retailers in Singles’ Day in 2016.

 

3) Dedicated Social Media Campaigns

Last year, European companies taking part in Singles’ Day launched dedicated social media campaigns to engage with consumers during the shopping event. For example, for Singles’ Day 2016, Feelunique launched “Single is not a sin,” a social media campaign that encouraged single consumers to share comments about the most embarrassing situation that made them decide not to engage in a relationship. The social media campaign received more than 5,700 impressions and over 1,000 likes for top comments, according to Azoya.

This year for Singles’ Day, Feelunique is creating a bigger buzz through collaborations with selected local e-commerce players. The online beauty retailer’s 11.11 campaign is aimed at educating customers about European beauty products and creating brand awareness.

 

4) More Investment Expected this Year

We think the distinction between Singles’ Day as an event focused on domestic retailers versus Black Friday as an event for international brands is likely to fade. This is because more and more retailers, including domestic retailers, are expanding their range of overseas products that they offer to customers via cross-border e-commerce. For example, Kaola, Tmall Global and JD.com have started to promote cross-border shopping during 11.11. This development should encourage international retailers to focus more on Singles’ Day in 2017 in order to remain competitive, according to Azoya.

The expected scale of 11.11 this year should encourage more investment by retailers, including international retailers. We expect Singles’ Day 2017 sales to surpass last year’s $17.8 billion, given the unprecedented number of participating brands, significant offline retail offerings and Alibaba’s effort to expand the occasion from a one-day shopping event into a shopping season. According to Azoya, the following factors should encourage European retailers to invest more in 11.11 this year versus the previous year:

  • The promotional period has been extended from three days in 2016 (November 9 to November 11) to seven days in 2017 (November 6 to November 12). The upgraded scale of promotions is expected to help companies significantly with customer acquisition and sales.
  • More marketing channels are launching Singles’ Day campaigns.
  • Key opinion leaders (KOLs), such as vloggers, will be leveraged to create buzz.
  • Multichannel marketing and operations will be involved, such as migrating promotions from online to offline.

This year, 11.11 falls on a Saturday, and we expect this to further boost the scale of the event. The last time the event took place on a weekend was in 2012.

 

Main European Retailers Participate in Singles’ Day

Large European retailers including Sainsbury’s, Carrefour and Marks & Spencer have participated in previous 11.11 events directly—for example, Carrefour promoted in-store offers for Singles’ Day 2016—or indirectly through their presence on Alibaba’s online shopping mall Tmall.

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Below, we list how selected UK retailers with a presence on Tmall fared during Singles’ Day 2016, according to fashion business publication Drapers:

  • Marks & Spencer: The retailer recorded double-digit sales growth in 2016 compared with Singles’ Day 2015. During the day, M&S received 147,000 orders, with children’s wear, belted raincoats and cashmere jumpers among the best-performing products. M&S pulled its brick-and-mortar presence out of Mainland China in 2017, but retains its online presence on Tmall.
  • Topshop: Topshop’s sales on Tmall grew significantly during 11.11 2016 versus the previous year. Best-performing lines included denim and the brand’s petite range.
  • New Look: According to apparel retailer New Look, it achieved spectacular revenue growth during the event, with footwear and accessories recording the best performance.

More than 130 UK retail brands will participate in Singles’ Day this year through Tmall, according to Drapers.

 

Still a Non-Event in Europe 

Singles’ Day remains largely confined to Mainland China, although there are attempts to export the shopping event. Last year, for example, Alibaba launched a pilot program targeting Singles’ Day shoppers in Hong Kong and Taiwan for the first time, and announced plans to target customers in Southeast Asia in 2017, according to The Financial Times.

Currently, Singles’ Day has no significant presence in European retail, as we highlighted in our report Singles’ Day 2016: More European Retailers Participating—But Not in Europe, in which we listed a number of obstacles to the expansion of 11.11 to Europe:

  • In the UK, Ireland, France and Belgium, November 11 is Remembrance Day, when the war dead are remembered. In the UK, it typically includes two minutes of silence at 11 a.m. In France and Belgium, it is a public holiday.
  • In Poland, November 11 is Polish Independence Day, a public holiday that includes public ceremonies and church services.
  • We think the memorial nature of these days—and Remembrance Day in particular—would make it very difficult to launch a shopping festival on November 11 in these countries.
  • Furthermore, Black Friday is a still-new shopping event in Europe—where it is present at all—and that event is growing in scale each year. Given the increase in awareness of and participation in Black Friday, we see very limited appetite for another new shopping festival in such close proximity.

These observations remain valid, and we reiterate that we see little prospect for Singles’ Day to reach Europe in the medium term.