Shoppers worldwide are eager for the sales and deals that November brings. First there is Singles’ Day on 11/11 in China. Then, Black Friday in the U.S. These holidays are similar in the onslaught of sales and slashed prices the spirit of spending. However, there are stark differences between how e-commerce works in the U.S. and China. In this article we’ll discuss e- commerce in detail. Such as, the history, consumer behavior and finally what e-commerce will look like in the future. Specifically on 11/11 and Black Friday.
The History of E-Commerce
Electronic Commerce (E-commerce) is the exchange of goods on the internet. Most often, the buying and selling of products or services. Also the transfer of monetary funds from one party to another. There are two types of e-commerce: merchant and non-merchant. Common forms of merchant e-commerce are Business-to-Business (B2B), Business-to- Consumer (B2C), and Business-to-Government.
B2B deals distribute raw materials and services from business to business. Consumers themselves buy goods and/or services from sellers directly in B2C. Business-to-Government is when they sell their products and services to government agencies.
Non-merchant e-commerce is the exchange of goods without a company. Types of non- merchant e-commerce include auction houses and clearing houses. eBay is a popular auction house connecting buyers and sellers. They list products in bid format, buyers place bids for a set period of time, and the highest bidder wins. Clearing House is a retailer that lists products at a set price and handles the delivery. They never take ownership of the goods. This is best understood with stocks. Where any interested buyer can claim the product and have multiple purchasing options via different websites and apps.
The first form of e-commerce was in 1982 when the Boston Computer Exchange started trading used computers in an auction-like platform. Current e-commerce developed in the 1990s with simple products. Amazon launched in 1995 as a website selling books. Paypal came next in 1998 with their online payment system, allowing for an easier way to exchange money. In 1999, Alibaba started in the Chinese market. This, shifted the way the world viewed Chinese marketing and sales.
E-Commerce in China
The top e-commerce platforms in China are Taobao, Tmall, JD.com, Pinduoduo, and Little Red Book. Here, we’ll dive more into what these platforms are and what makes their model so successful.
Taobao and Tmall
Let’s begin with Taobao, which is a B2C app that allows businesses to set up their own pages for users to shop. Individual shops are responsible for their own delivery services. Along with Taobao, Alibaba also owns Tmall, a B2C platform that connects international businesses to Chinese consumers. Any business can set up an account on Taobao. Tmall focuses more on brand name products since the platform appeals to brand-conscious consumers.
Next is JD.com, also a B2C and specializing in the same type of e-commerce as the previous two platforms. What sets JD.com apart is its focus on technology and electronics. And its commitment to customer service by being the distributor of all its products. Chinese consumers usually will buy clothing, makeup, and different types of bags on Taobao and Tmall. But switch over to JD.com for home appliances and smart devices. JD.com has become more competitive in China by partnering with Walmart, one of the largest retail corporations in the U.S.
Ranking fourth in top performing e-commerce platforms is Pinduoduo, also a B2C service. Unlike the other Amazon-like platforms, Pinduoduo operates a “group order.” First they set a price on a product that will lower if more people join the group order. They list products in 24-hour increments with a minimum number of buyers required for placing an order . When there aren’t buyers enough in the group, they cancel the group order and return the money.
This model encourages a social atmosphere for sharing products among family, friends, and on social media. On the other hand they do sell items individually, but the price is much higher than it is through group ordering.
Taobao, Tmall, and JD.com dominate Tier 1 cities in China – Beijing, Shanghai, Shenzhen, and Guangzhou. Interestingly, a majority of Pinduoduo users reside in Tier 2 cities like Xi’an, Suzhou, Nanjing, and Chengdu. Because consumers in Tier 2 cities are far more likely to prioritize price over brand, Pinduoduo is a top performer.
Little Red Book
Last, but certainly not least, Little Red Book is a social media platform like Instagram. It also operates as an e-commerce service that shifts advertising to the app users themselves. Users of Little Red Book rely heavily on app posts when deciding whether or not to purchase a product. The GabChina website has articles on Little Red Book: what it is, how to use it for marketing, and how to grow a following. Little Red Book allows users to link products to posts and buy directly on the app.
Things to be Aware of When Using E-Commerce
The rise of e-commerce worldwide brings in both benefits and concerns. One important aspect is the control of debt with younger buyers. So, many retailers offer a buy now, pay later system, allowing people to pay in monthly installments. This allows buyers to get something instantly, or have it delivered, without worrying about the price. The main risk of this system is the buildup of debt. Many buy now, pay later platforms charge a small interest fee for the monthly installments. However, when a customer is unable to meet the payment deadline, late fees begin to rack up. Examples of buy now, pay later in the U.S. are AfterPay and Paypal which major retailers and e-commerce platforms use. Likewise in China, companies like Alipay and Tencent have their own buy now, pay later using Huabei and FuFen, respectively.
Huabei doesn’t require users to provide credit card information which is a normal procedure for e-commerce payments. Some view this negatively because it allows users to continue to purchase products without some kind of continuous collateral held. Furthermore, this system doesn’t encourage financial responsibility and may put younger consumers at risk for debt.
The Spirit of 11/11 and Black Friday
11/11 or Singles’ Day is, you guessed it, a day celebrating the single life. Nanjing University students created this day to treat themselves and embrace singledom. The day took on a synonymous meaning to shopping till you drop in 2009. This is when Alibaba marketed the holiday as a major shopping day with big offers and enticing sales. Since then, 11/11 has continued to grow into the most significant revenue-earning holiday not only in China but worldwide.
Black Friday dates back to the 1960s when Philadelphia newspapers began to notice shoppers making purchases the day after Thanksgiving. It gained traction in the 80s, and by the early 2000s was a nationwide phenomenon. It’s notoriety lies in the lively, overcrowded stores that holiday shopping evokes. Because in-person shopping was central to the Black Friday experience. However, the influence of e-commerce, and Covid-19, is causing brick and mortar stores to become less important to shoppers.
Is Brick and Mortar Shopping Outdated?
On the other hand, the heart of 11/11 has always been e-commerce platforms. While retail does see an influx of in-person purchases, 11/11 is mainly an e-commerce holiday. A parallel of 11/11 is Cyber Monday. In fact, popularity rose as quarantine restrictions in the U.S. prevented traditional Black Friday sales events. Yet, Cyber Monday does not exhibit the same enthusiasm as Black Friday does. Black Friday has become an event to prepare for:
- Wake up early.
- Wear the right clothing to avoid fitting rooms.
- Wait outside a store or mall hours before opening, etc.
Physically participating in Black Friday festivities evokes excitement that online shopping doesn’t.
However, some consider brick and mortar shopping to be outdated. While shoppers are able to try on items to check fit and quality, it is time consuming. Brick and mortar stores require a commute, be it walking, driving, or public transportation. Fitting rooms and check out lines also add extra time and frustration. Additionally, there is no guarantee that an item you want is in stock.
One reason behind the success of e-commerce in China is the convenience of the apps themselves. These platforms have suggestion pages, easy-to-read review sections, and image search allowing users to find exactly what they want. Moreover, they offer quick delivery and keep any fees low. Many stores on Taobao and Little Red Book host live-streams showcasing products in a practical way. For example, models try-on different clothing items and stores show how to use a specific appliance. This allows users to experience a product without having to enter a physical store. Amazon offers speedy delivery with its Prime membership. On the other hand, the app design is simple and unappealing for marketing purposes.
This past Single’s Day brought in huge revenues despite operating during a global pandemic. Taobao and Tmall earned a combined 84 billion USD and JD.com made 54 billion USD on November 11, 2021.
What Does 11/11 Mean For Your Marketing?
Single’s Day offers record-breaking sales. So this means that sites are pulling out all the stops for this holiday’s marketing campaign. At the heart of 11/11, companies are marketing intensely and slashing prices. Because affordability isn’t the sole concern of the consumer. And options are in abundance. The question your marketing campaign needs an enticing answer to is: “Why us?”
Here are some considerations and ways to build influence and trust with consumers on 11/11.
KOL & KOC
If you are going to build influence, you need to ask: “Who do consumers trust?” Answer: Key Online Leaders (KOL) and Key Online Consumers (KOC). KOLs and KOCs are social media influencers that followers trust. The main difference is KOLs tend to have a specialized focus in a particular industry with a large following. Instead, KOCs are people that review products and services from various industries and tend to have a smaller following. However, the trust placed in KOLs and KOCs by their followers is unmatched. Therefore, the influence of both plays an instrumental role in convincing consumers to purchase your product.
Pushing Your Brand’s Values & Specialties
Another aspect is thinking of pushing a marketing campaign that focuses on the strength and value of your product. If you are a fashion retailer, is it the quality of your clothes? Are you environmentally sustainable? KOLs and KOCs are not only valuable because of their trust but also because of who they are. They create an outward image to the public, saying: People with values like ours, use and believe in this product. Now, the public needs to hear from you. Why do people with those values use your product and not someone else’s? What is your brand’s message and what does your brand do that no one else does?
On 11/11, there’s an influx of impulse shoppers, and there’s a many chances for a shopper to try your product for the first time. If you market your brand’s value you can create an increased profit on 11/11. Also, it is a valuable opportunity to convert that consumer into a loyal customer.
Countdown Sale Advertisements
Lastly, and on a surprising note, drive a good bargain and spread the word early! 11/11 is the most anticipated shopping event of the year. Often consumers are already predicting and planning on what they would like to buy in advance. The build-up to 11/11 is part of the appeal. So having a marketing campaign that is counting down with the shopper will drive up excitement for your sale. In addition, it will spread the word and increase your brand’s visibility.
While 11/11 and Black Friday share some parallels, the differences lie in the cultures which influence consumer behavior. In China, the opportunity 11/11 holds for your company is unmatched. For companies looking to take advantage of all this holiday has to offer, Gab China is happy to create a strategic marketing plan. One that will drive sales for your company on 11/11.