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No Mind-Blowing Growth for Singles Day 2022

November 22, 2022
November 22, 2022
Alibaba Group

Double 11 came and went this year without the star-studded celebrations or mind-boggling revenue reveals. For the first time in 14 years, Alibaba and JD.com have remained close-lipped about the November 11 Singles Day results. Syntun, an independent big data monitoring company, reported the total GMV from all major e-commerce platforms surpassed $140.5 billion (1 trillion RMB) for the first time for China's most important shopping festival.

"In terms of communications from the platform companies around the festival, there's been a shift away from celebrating excessive consumption and emphasizing gross merchandise value (GMV)," Jacob Cooke, the CEO of e-commerce consultancy WPIC Marketing + Technologies, told Tech Asia. "The shift has been going on for a few years now, and that's related to common prosperity, the anti-monopoly drive," he added, referring to President Xi Jinping's ongoing drive to curb the influence of big tech.

Singles Day started as a one-day event but has morphed into an 18-day online campaign. This year's Singles Day featured over 290,000 brands from over 90 countries and regions across 7,000 product categories.

“The Shanghai lockdown early this year dramatically impacted 618. Understandably, the Shanghai consumers, as well as the whole country had a huge trauma from such an unexpected harsh reaction, hence were suffering PTSD," shared Elisa Harca, co-founder and Asia CEO of marketing agency Red Ant. "However, we are pleased to see that consumer appetite for shopping has recovered somewhat, and 11.11 for most brands we work with was positive. Most of the brands met their 11.11 targets, or were close enough to doing so to help them feel positive about leaning in to 2023."

Growth Slows on Traditional Platforms

  • This year, Tmall and JD.com did not announce their GMV (Gross Merchandise Volume) results for Double 11. 
  • Tmall reported sales volume was the same as 2021, which reached $74.56 billion (540.3 billion RMB).
  • JD.com indicated their sales surpassed the industry growth rate and reached a record high after last year's $48.17 billion (349.1 billion RMB) GMV, but specific numbers weren't given.
  • Syntun reported traditional e-commerce platforms netted around $131.1 billion (934 billion RMB).
  • JD saw a cooldown on spur-of-the-moment purchases, with consumers investing in products that can bring high-value and long-term returns, such as products for health, fitness, and education, as well as services that help save time. More than 1,600 nutrition brands doubled their YoY transaction volume, and online consultations with JD Pet Health increased 3.3 times.
  • Keyword searches of "energy-saving," "green," "low-carbon," "organic," and other similar terms surged dramatically on JD.com.

Newcomers Are Catching Up

  • In the first hour on October 31, Tmall disclosed turnover of 102 brands exceeded $13.8 million (100 million RMB)
  • Douyin launched commerce functionality in 2020, and GMV increased 629.9% year on year on the first day of Double 11 this year. 
  • Syntun reported newer streaming to e-commerce platforms, and community group buying e-tailers saw around $25.4 billion (181 billion RMB).
  • According to Iris Chan, Digital Luxury Group's Head of International Client Development, the number of participating merchants increased 86% year on year, with both local and global beauty brands activating their flagship stores on Douyin. Brands like Korean prestige skincare brand Whoo, which has struggled in the market with the faded trend of K-beauty, have come out as top performers on the Douyin marketplace, finding opportunity in an increasingly competitive market.

The Beauty Numbers

  • Digital Luxury Group shared that beauty remained one of the top category in terms of GMV for Singles Day with over $4.7 billion (34 billion RMB) in sales, although a decrease of 7.7% from 2021. 
  • Skincare and the major players in the category led the way, including L'Oréal, Lancôme, and Estée Lauder. Cosmetics did not see much change, with the mask mandate in effect; however, notably absent from this year's Singles Day beauty ranking was Perfect Diary.
  • Top 5 skincare brands on Tmall were L'Oréal, Estée Lauder, Lancôme, Olay, and Proya, and on JD.com the ranking was Lancôme, Estée Lauder, SK-II, Helena Rubinstein and L'Oréal.
  • Top 5 makeup brands on Tmall were MAC, 3CE, Florasis, YSL, and Estée Lauder, and on JD.com, the ranking was YSL, Dior, Chanel, Estée Lauder, and Clé de Peau Beauté.
  • According to Harca, "For beauty brands, celebrity livestream is still one of the most efficient methods to achieve quick and high conversion. There were 31 livestreams that involved celebrities among beauty brands this D11, and it took up more than 40% of total celebrity livestreams on Tmall."
  • Big brands continue investment in omnichannel strategies. C-beauty brand Winona showed first at Austin Li's variety show "Offers to Every Girl" on Bilibili in the pre-warm stage, then launched its 12th anniversary brand campaign on Weibo on October 20, followed by massive KOL and KOC content across the whole D11 period on RED, plus an offline pop-up at the end of October and finally a celebrity livestream on Tmall in November to finish the shopping festival.
  • In the first 10 minutes of Peak 28 Hours, which started at 8 pm on November 10, the transaction volume of 87 international beauty brands increased 200% year on year.
  • During the Peak 28 Hours on JD.com, hair treatment brands René Furterer and Keratase, as well as Australian brand Selsun, rose 29 times, 12 times, and 142%, respectively, in transaction volume compared with last year. In addition, beauty device CurrentBody, Trilogy Rosehip Oil, and UK skincare brand Zelen's were up 8, 2, and 3 times, respectively.
  • "China-chic" has been a booming trend among Chinese Gen Z. In the cosmetics category on JD.com, 299 brands achieved transaction growth of more than 10 times YoY, and 952 brands more than doubled their transactions, of which 239 are domestic brands.
  • JD.com reported skincare consumption is being driven by consumers’ focus on ingredients and efficacy, leading to a demand for products to be more refined and functional.
  • Korean skincare brand Dermafirm announced that it recorded $15.5 million (KRW 20.8 billion) in sales compared to $5 million (KRW 6.8 billion) in 2021 on Tmall and TikTok. The year-on-year growth has increased by 204.8%.
  • La Prairie's GMV during the first four hours of the first sales window surpassed the entire 11.11 sales period last year. 
  • According to Allie Rooke, founder of Clean Beauty Asia, within the beauty and personal care category, the big winner was the L'Oréal group. L’Oréal Paris took the number-one ranking spot and overall had six brands in the top 20 vs. Estée Lauder’s two brands.

Trends

  • Harca shared that brands started with early warm-up campaigns preceding the official Tmall pre-sale period to 1) inform consumers of the offers and 2) create buzz before the main hype—if brands wait too long they will unfortunately get lost in the content chaos. 
  • Tmall reported that the four power pillar industries of beauty, FMCG, consumer electronics, and clothing were replaced by outdoor sports, pet supplies, collectible toys, and jewelry this year.
  • According to Douyin's 2022 Double 11 report, domestic goods accounted for more than 90% of the top 100 best-selling products. Uber KOL Austin Li selected many more local Chinese brands to work with this year. 
  • Bain & Co. partner James Yang speaking on Alizila's podcast, said that more than 200 luxury brands launched on Tmall this year, but rather then discounting for Double 11, they used the shopping holiday to release new products.
  • In an effort to attract China's digitally native younger generations, brands deployed virtual idols during 11.11. Market research firm Forrester predicted that a fifth of B2C brands in China will use digital idols by 2023.
"Singles' Day has been totally diluted in terms of the impact. No one had much expectation about whether they would beat or not. I think it becomes more like a formality or a numbers game."
By William Yuen, Investment Director, Invesco Hong Kong Ltd.

Are the subdued results an indication that the Chinese consumer is changing? Consumer demand was more muted than in previous years, with analysts attributing the results to a lack of spending power and dampened desire to spend because of the hardline zero-COVID policy.

As the Chinese market matures amid economic uncertainty, the exponential phase of China's e-commerce market growth seems to have ended. Now the focus for brands and retailers has shifted away from heavy discounting to optimizing consumer experience and retention.

Jing Daily reported that Dai Shan, President of Alibaba's Core Domestic E-Commerce, pointed out that the future of Double 11 is no longer that of a machine producing ever-higher GMVs, but rather an important platform for a better consumer experience and business growth.

Its rival JD.com did not publish GMV or sales growth rate either. Alibaba did not hold its usual celebrity-studded gala show this year nor any in-person media events, citing the COVID-19 pandemic.

The e-commerce platform's growth merchandising value (GMV) was widely predicted to post flat to low single-digit growth, underscoring weak Chinese consumer sentiment hit by stringent COVID-19 curbs and a sharply slowing economy.

In a press release, Alibaba said the event had "delivered results in line with last year's GMV performance despite macro challenges and COVID-related impact." GMV growth has been slowing in recent editions of Singles Day—the world's biggest online shopping festival that has, despite its name, evolved into a multiweek event and is a key barometer of Chinese retail demand.

According to Reuters Consultancy Syntun, "Alibaba and other Chinese e-commerce firms holding Singles Day shopping events together logged a 4.7% decline in sales for the first 12 hours of the final day." Last year's 8.5% GMV rise for Alibaba's platforms was its lowest-ever growth rate, following a 26% jump in 2020. Before 2020, the festival was a one-day event.

Citi analysts said this week they were conservatively forecasting Alibaba's GMV for the event to range from 545 billion yuan to 560 billion yuan ($75 billion to $77 billion), with growth of 0.9% to 3.6%.

Alibaba Numbers:

  • Alibaba said in a statement gross merchandise value was "in line with last year's GMV performance despite macro challenges and COLVID-related impact." Sales last year reached 540.3 billion yuan ($76.1 billion).
  • Alibaba's Tmall marketplace offered Singles Day deals on more than 17 million products—3 million more than last year—with a record-matching 290,000 brands participating.
  • Alibaba noted sales of high-tech beauty devices such as gadgets to cool and lift facial skin had surged some 5,570% from last year. 
  • Swiss beauty brand La Prairie's GMV during the first four hours of the first sales window surpassed that of the entire 11.11 sales period last year. GMV refers to the total value of orders paid using Alipay on marketplaces Taobao and Tmall.

JD.com Numbers:

  • JD.com provided nearly 20 million new items this Singles Day, with the total transaction volume increasing 1.57 times compared with the same period in October, of which half achieved a month-on-month growth rate of over 200%.
  • JD reported that during the first 10 minutes of this period, turnover for 87 international beauty brands, including Estée Lauder, L'Oréal, and L'Occitane tripled from last year in the first 10 minutes of sales.

The Experts

"In recent years, livestreaming seems to have created a quick way for brands to get famous and sales boomed," Dave Xie, a Shanghai-based principal of consultancy Oliver Wyman, told Bloomberg. "Amid the recent falls of the superstar livestreamers, brands are now actively speeding up the development of their own livestreaming studios" in order to cut ties with the top influencers, while retailers are also shifting to smaller platforms, he said.

"Weak buying sentiment among mainland Chinese shoppers and logistical disruptions will persist amid ongoing mobility curbs under China's Covid-Zero policy," wrote Bloomberg Intelligence analysts Catherine Lim and Trini Tan.

"Overall platform diversification is a trend, driven by consumer behavior and brand strategy," Sherri He, Managing Director of Kearney Greater China told Bloomberg. More and more brands have opened stores on JD.com and other platforms in the last year, she said.

Apart from rising rivalries, this year's Singles Day was weighed down by China's slow economic expansion. Gross domestic product in the third quarter rose 3.9%, while retail sales growth slowed to 2.5% in September from August's 5.4% increase, according to data from the Chinese government.

"Singles' Day has been totally diluted in terms of the impact," William Yuen, Investment Director at Invesco Hong Kong Ltd. told Bloomberg. "No one had much expectation about whether they would beat or not. I think it becomes more like a formality or a numbers game."

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