While all eyes are on Amazon Prime Day on July 16-17, China’s ecommerce powerhouse JD.com has joined the growing list of ecommerce holidays with its 618 Festival from June 1-18. It racked up an impressive $25 billion in transaction volume, up 37% from last year.
According to Coresight Research, Prime Day 2018 sales are poised to surge 40% to at least $3.4 billion over the 36-hour sales period. Global ecommerce holidays have become increasingly pervasive and lucrative, as these impressive results prove:
- Alibaba’s Singles Day 2017, held last November, earned $28.1 billion, $25.3 billion of it settled on Alipay
- Black Friday 2017 raked in $5.03 billion in U.S. online sales
- Cyber Monday 2017 also broke records, topping $6.59 billion in U.S. online sales
Why is China’s retail market important to U.S. retail companies? Beyond its enormous market size, growing affluence and appetite for U.S.-made products, China’s technological sophistication has helped make it a trendsetting country shaping global retail. That’s why so many experts – including Internet trends guru Mary Meeker – are paying close attention to China’s retail market.
Chinese Ecommerce Trends to Watch
Hot trends fueling ecommerce holidays included influencer marketing, cashless payment and integrated social commerce platforms like WeChat.
Influencer marketing has taken off, driven by key opinion leaders (KOLs). As we discovered in our research with Frost & Sullivan, the use of KOLs in China appears to be especially effective. Fashion and luxury bloggers are considered the most important KOLs by monthly expenditures from consumers, and online video platforms are potent sales tools.
China has evolved into a cashless society, as 527 million Chinese forego cash for smartphone apps like WeChat Pay or Alipay. Ipsos’ recent study on Chinese mobile payment habits shows that 26% of the respondents carry less than 100 RMB ($16 USD), and 14% of the respondents don’t carry cash anymore.
Social commerce contributed to JD.com’s 618 Festival success, including the development of WeChat mini-programs. WeChat mini-programs are “sub-apps” within the WeChat ecosystem, which allow such integrated retail applications as ecommerce and digital coupons. For 618, the number of group purchases increased by a factor of 24 year-over-year, and the number of mini-program customers rose by a factor of 66 from last year.
Insights for Shopping Holiday Success
Here are insights from the 618 Festival, which U.S. retailers need to know to prepare for other upcoming ecommerce holidays, including Alibaba’s Singles Day, the biggest sales event in global retail.
Adopt a multichannel approach: As the ecommerce space gets increasingly crowded, leading retailers are now adopting a multichannel approach. For instance, strategies include a WeChat mini-program store, online marketplace presence and a standalone ecommerce store to increase their digital presence and decrease risk of missing sales opportunities. Driving traffic on smaller platforms like Kaola or Little Red Book may be more affordable and result in higher ROI for ad spending.
Invest in organic traffic growth: Create alluring content to help users discover your brand in new ways. Growing a fan base on WeChat Official Moments and Little Red Book can encourage consumers to read and share your content with their friends and family. Pop-up stores also build brand awareness among consumers who normally wouldn’t have noticed your products online.
Make your marketing strategy more social: Group buying platform Pinduoduo has leveraged the power of social commerce and lowered user acquisition costs by offering heavy discounts to consumers who share their purchases with friends. With the addition of WeChat mini-programs and the product search function, consumers can now discover and purchase your products all within the WeChat ecosystem. Retailers can leverage mini-programs to offer group discounts and loyalty programs as well.
Consider strategic merchandising: Not all categories of products set new sales records during these sales events. For instance, the 618 Festival favored certain verticals such as electronics, cosmetics and nutritional supplements. Meanwhile categories like baby products and men’s clothing performed well in late May yet decreased on June 18. Yet each of these categories has been a top performer for Black Friday cross-border ecommerce sales, when Chinese shoppers are more likely to buy American and foreign brands online.
Avoid out-of-stocks: Think carefully about which SKUs to stock to ensure you have sufficient inventory for in-demand products. While bestsellers may be obvious focal points for your online assortment, also consider how many long-tail items to stock to ensure a pleasant customer experience. Look to your sales data and competitive data to decide which products are most popular and which differentiate you from your rivals.
With the year’s biggest global ecommerce holidays approaching fast, now is the perfect time to consider how your company will participate to ensure you stand out and sell. Using these proven tips can help your company gain a competitive advantage as you establish a digital presence in the world’s biggest online sales events.
Franklin Chu is Managing Director of Azoya USA