Will Singles Day be able to Retain its Appeal Amid Changing Shopper Habits?

The spell that Singles’ Day casts over Chinese shoppers appears to have lost some of its potency.

The world’s biggest online shopping event may remain popular but the hedonistic self-indulgence has been toned down a notch, replaced by the sober reality that China’s economy is still navigating a path out of the pandemic and that the industry faces regulatory challenges ahead, analysts say.

“I don’t think it is realistic to expect Singles’ Day to grow at the same pace that it did in the past, and the current economic environment has certainly created additional headwinds,” said Man Chung Cheung, research analyst at Insider Intelligence.

Alibaba Group Holding’s gross merchandise value (GMV) for this year’s Singles’ Day grew to a record 540.3 billion yuan (US$84.5 billion), marking 8.45 per cent year-on-year growth, the first single-digit GMV growth since the company created the shopping festival in 2009. Alibaba owns the South China Morning Post.

The traditionally extravagant event, with multibillion-dollar galas featuring appearances by celebrities including Taylor Swift and Mariah Carey, also appeared much more low key this year in the wake of a months-long crackdown by Beijing on Big Tech companies – in part aimed at limiting their power and influence.

“It’s always impressive to see that every year Alibaba can do better,” said Steffi Noel, project leader at Daxue Consulting. “But let’s not forget that growth from 2019 to 2020 was 86 per cent, so we can conclude that Double 11 is maybe losing a bit of its original magic.”

Aside China’s slower economic expansion – GDP stalled at 4.9 per cent in the third quarter from 7.9 per cent in the second – a gradual change in consumer habits is also under way, analysts say, as similar discount campaigns by rival e-commerce players and shopping events on different platforms spread throughout the year lessen the appeal of Singles’ Day.

Among them is 618, a similar shopping event created by online retailer JD.com that falls on June 18, and aggressive discounts constantly offered by e-commerce live streamers.

“There is a bit of fatigue in general,” said Ashley Dudarenok, founder of China marketing agencies Alarice and ChoZan. “Right now 11.11 faces a lot of competition … Virtually every two weeks there’s some discounts, some activities and opportunities [for people] to buy cheaper and better in a specific category or in general, so 11.11 is transforming right now.”

Materialism may also be on the wane among millennials.

“While e-commerce will remain important in China, we’re seeing a gradual change in consumption behaviour from the new ‘Buddha-like youth’ generation, who are moving away from materialistic possession,” said Hong Kong-based retail analyst Tiffany Lung. “Consumers nowadays are also unfazed by exaggerated discounts, being aware of deceptive price drops.”

Beijing’s tougher stance on Big Tech platforms, which has seen a crackdown on monopolistic practices and greater efforts to protect user data, has also led to a deeper shift in how platforms are approaching the event. President Xi Jinping has also been pressing his “common prosperity” drive in 2021, a new initiative to reduce economic and social inequality.

“No longer are we seeing the glitzy live counters, the tech giants are treading cautiously not to further upset the government with the crackdown on extravagant consumption in line with the country’s common prosperity [goal],” said Lung.

After paying a US$2.8 billion penalty in April for breaching China’s antitrust rules, Alibaba’s shopping sites had to stop demanding exclusivity from their vendors. Regulators have also been working overtime to crack the walled gardens maintained by the country’s internet giants, which have traditionally closed off the ecosystems of different platform providers.

Hours before Singles’ Day kicked off, local authorities in Guangdong summoned Alibaba, the services delivery giant Meituan and online shopping platform Vipshop to drive home the interconnectivity message, warning them against unfair competition.

“The prohibition of self-selective treatment prioritising a platform’s own products to consumers and the new requirements for personal privacy and information protection are all transforming the way Alibaba’s platforms are recommending products and convincing online users,” said Daxue’s Noel. “We can be sure that the next shopping festivals will take place in a slightly more authentic shopping environment.”

Lung also pointed out that this year’s event also saw platforms focusing on social responsibility with sustainability considerations, which would in turn influence purchasing decisions and selling tactics going forward.

“Slowly over time, we may see Chinese retailers and brands adopt the Western approach with Black Friday, taking a stand against overconsumption and overproduction,” Lung said.

Noel added that Alibaba has opened recycling stations to deal with the perennial over packaging issue. While the impact of these measures would be rather limited this year, these new sustainability goals are “definitely going to change the rules of Double 11 for merchants in the future,” she said.

The government’s push for common prosperity has also seen e-commerce platforms focus heavily on driving growth in lower-tier markets this year, said Ben Cavender, managing director at China Market Research Group. While that has brought them new customers, the downside is that “a lot of those purchases are fairly small”.

But while the Singles’ Day shopping spree will likely generate less buzz in the coming years, it does not mean that the festival is going away any time soon.

“The day is absolutely going to remain important and I think a big shift we saw this year was Singles’ Day deals no longer being mainly restricted to e-commerce,” said Cavender. “It‘s now common for offline businesses to also get in on the action, so Singles’ Day is here to stay, the form it takes is just likely to change.”

“I think that Singles’ Day will always hold a special place in the hearts of Chinese consumers,” said Cheung. “There is always the aspect of a new shopping experience and excitement unmatched by other shopping festivals. It may have lost some air… but it is still an opportunity for brands to have quality and meaningful interactions with consumers.” (Source: scmp.com)