THINK TankNovember 21, 2019

What Can Amazon Learn From Alibaba’s Singles’ Day Success?

Tony D'Onofrio and Carol Spieckerman Weigh In

The Breakdown: Chinese e-commerce giant Alibaba smashed sales records during Nov 11th’s ‘Singles’ Day’, reportedly bringing in more than $38 billion in sales during the marketplace’s annual one-day shopping festival. 

With over 200,000 retail participants, Chinese shoppers spent the most on imported food supplements, cosmetics, toiletries, diapers and baby formula. Brands L’oreal and Nestle were also among the event’s top sellers.

To keep up with hundreds-of-millions of queued deliveries, Alibaba kept its e-commerce facilities open overnight and reportedly used high-speed bullet trains to quickly move packages across the country.  

This year’s Singles’ Day widely surpassed Amazon’s similar Prime Day event. Although the American retailer has not yet released sales numbers from this year’s Prime Day, analysts estimate that the retail event took in roughly $5.8 billion.

 

Q: What can Amazon and other eCommerce retailers learn from Alibaba’s Singles’ Day success?

 


 

The Weigh In: Tony D’Onofrio and Carol Spieckerman 

 

Carol Spieckerman: Well, it was quite impressive, right? Especially given that this year was kind of an anomaly with the trade situation, and there was some even anticipated backlash, perhaps, from Chinese customers against U.S. brands. It’s going to be interesting to see how individual brands fared, not just Alibaba as a whole. The big learning to me is that retailers are going to have to keep brands interested in their platforms. One thing I talk a lot about is the fact, just a fundamental truth, that retailers are no longer just places that sell stuff. They’re platforms, and those platforms now tie together brands and products and data and content, so they have a lot more to offer brands. And going forward, I think everything’s going to be about building platforms,
leveraging platforms, and platform partnerships.

 

Carol Spieckerman: In that regard, Alibaba and Amazon are all over that, right? They very much own their role as a platform. But Alibaba is really set apart, because it’s a gateway to a massive and complex market that would be really difficult for a lot of these brands to access any other way, and particularly U.S. brands. And also, the timing for Singles’ Day is interesting, because it gives
these U.S. brands a runway to the holiday season so they can test concepts, they can get that momentum going. When you contrast that with Amazon, Amazon starts to look more just like a distribution option. And something I think we’re going to talk about later, as a matter of fact, we see that brands, high equity-developed brands like Nike, are starting to opt out of the Amazon
platform, and instead they’re building their own platforms and controlling their destiny by focusing more on their direct-to-consumer business.

 

Carol Spieckerman: I think the big learning is that retailers and brands are, first of all, they’re going to be migrating in and out of these platform partnerships, so nobody should assume they’re going to last forever. And also, retailers really are going to have to go beyond just being places that sell stuff and start to frame their value to brands as being full-spectrum platforms. I think Alibaba and Amazon have done a pretty good job of it. Walmart actually is doing a really good job of making the shift.

 

Carol Spieckerman: Amazon in particular is going to really have to stay on its game to keep brands interested in the Amazon platform. And you could say that they’re sort of working against themselves as they continue to just blow up their private brand portfolio to where Amazon is competing against its own customers. I think you look at brands like Nike, and they’re increasingly thinking of Amazon not only as being too competitive, but perhaps being a more commoditized space, where they’re not putting their best foot forward. These brand relationships are really where I think the focus should be, and I think Alibaba is doing a really great job of wooing brands and creating a compelling proposition and marketing its platform and its platform advantages to
those brands.

 

Tony D’Onofrio: Yeah, I just want to really, to meet China at the laboratory for what is happening to retail. And in fact, I use the Singles Day as my closing slide when I talk about the disruptive future of retail for a bunch of reasons, but I’ll point out only three here. And to me, if you look at China, really what you’re showing Singles Day repeated is the power of mobile. There are in China 500 million people that shop every month on a smartphone, and 83 percent actually make payments and actually transfer money. The mobile community actually facilitated all that commerce. That’s one. Two, it’s also how is advanced they are in ePay. The ability to pay with smartphones. It’s highly advanced. 900 million people actually pay with smartphones in China, and 60 percent of those are on mobile.

 

Tony D’Onofrio: And three, what they’ve done extremely effectively in Singles’ Day is really made it into an immersive experience. It’s really a big party. You had Taylor Swift opening it up, and then you had Mariah Carey, Nicole Kidman, Kim Kardashian, and all chipping in into this one big shopping party that was maintained for 24 hours. And to me, those are all lessons to where the
others need to look at in terms of how you change retail for the new generations.

 

Carol Spieckerman: Amazon has already dipped a toe in the water in terms of event marketing and some of the things that Tony was calling out. But I do think that Amazon, in some cases, can get in its own way by thinking too much about algorithms and automation, and sort of ignoring that human side and that emotional side of the business. And that’s where Alibaba really again has a leg up as Tony was outlining, and what I was talking about in terms of platform leverage. A big part of Alibaba’s platform, yes, is the mobile capabilities, but it’s content marketing. In fact, a lot of the increases that they’ve been experiencing, some of those exponential increases in their business, they have directly attributed to their power of content marketing. That’s again another benefit that they bring to the brands that play on their platform, and it’s an incredible strength, and one that Amazon would be well to emulate.

 

Tony D’Onofrio: I do think also that there’s a difference between shopping and just buying. I think Amazon is too focused on the buying and not on the shopping. By that I mean, shopping to me is really the inspiration and the discovery and the journey and getting entertained along the process. Versus just the clinical, when they give you a place to go buy and I’m going to make it immediate, and I’m going to gratify you currently but I’m not going to make it an experience. I do think that’s what’s got to change, because I think that becomes even more important with the connected generations.

 

Carol Spieckerman: I always sum it up as saying not every path is a path to purchase. Sometimes it’s a path to engagement that leads to purchases down the road. And I agree with Tony that that is something that Amazon needs to take heed of.

 

Tony D’Onofrio: Yes. And one final comment only. It was good news, because actually they were worried that Singles’ Day was actually going to be a negative with the U.S. because of all the trade war, and the Chinese were going to boycott the U.S., and that did not happen. The U.S. was number two country in terms of contributing what was bought, with jewelry and apparel being the leading category, so that didn’t happen. But the final comment that I’ll make, Jack Ma, the founder of Alibaba, was not happy with Singles’ Day this year. So that tells you that there’s still got some lot of experimentation coming down the road.

 

Tony D’Onofrio: It did not meet expectations is the way he put it. They had more aggressive plans that I think did not materialize. Now, he’s actually stepped away from the day-to-day, so it’ll be interesting to see whether they can maintain this fanatic growth. Because if you think about it, they had in one day almost half of Amazon’s revenue does in the entire year.

 

This conversation first appeared on the Nov. 18 episode of the Retail Rundown.