Alibaba features more than 290,000 brands for the 14th edition of its 11.11 Global Shopping Festival, known as the “Double 11 Shopping Festival” in China. This year, the Hangzhou-based internet giant has equipped merchants with tools and solutions to grow their brand loyalty membership programs and unveil new products, among other initiatives, to help them succeed during and beyond 11.11.
China is the second-biggest retail market globally, with online penetration levels that are among the highest in the world. Strong brand awareness and an omnichannel footprint in China can mean the difference between a profitable year and a dud for retailers.
Bain & Co surveyed the customer base of five retailers in China with loyal consumer followings. It found their shoppers valued this elite group for their product quality, product range and membership programs over their pricing.
“Clearly, when it comes to building a strong, long-term relationship with shoppers, there is more to success than just offering deep discounts,” said Bain & Co in its report.
Benchmarking loyalty programs instead of using GMV, a revenue metric that has historically gauged growth during Chinese online shopping festivals, would set retailers up for year-round success.
Alibaba’s Loyal Following
“11.11 this year will have the most diverse range of products in the event’s history, with 17 million products available to more than one billion annual active consumers on our platforms in China. We aim to leverage tech innovation and digitalized operations to make this year’s 11.11 the best engine for our merchants’ customer growth that will last for the long term,” said Chui Xue, President of Industry Development and Operation Center of Alibaba’s Taobao and Tmall.
Membership has become a keen focus of brands on Tmall, as it allows them to interact most directly with consumers and, for some, ensure a higher degree of certainty over sales during 11.11. To date, more than 40 brands on Tmall have loyalty membership programs that surpassed ten million members, while 600 brands have loyalty membership programs with over one million members. Many top brands, including Nike and Unilever, are already running brand loyalty membership programs through their Tmall stores to engage with existing customers more effectively and capture new customers, especially from the base of over 123 million annual active consumers who spend more than 10,000 yuan annually on Taobao and Tmall.
“In the future, we hope to provide certainties to both consumers and merchants through brand membership programs,” said Zhang Xiuming, who is in charge of Taobao and Tmall Brand Loyalty Membership Program. “For consumers, they will clearly know what additional benefits and services they can get on each level of membership [throughout our platforms]. While for merchants, they can use our unique tools to continuously engage their members to improve the business growth certainty.”
A member-led sales growth is taking place on Tmall. On November 1, more than 4,000 brands saw their GMV generated from their members more than double year-on-year and 82 brands surpassed RMB100 million in GMV generated from their members. With 2,700 prominent brands saw their members contributing more than 50% of their GMV, it is clear that member-led GMV is playing an increasing important role in brands’ business success during and beyond this year’s 11.11, acting as a key indicator of their long-term development.
Among the ways the platform attracts consumers is in enhancing consumer experience on the platform. About 2,000 brands are using Alibaba’s immersive XR technology in livestreaming rooms to launch products this 11.11. In the first hour of the first sales window, the number of views recorded by Taobao Live increased 600%, compared with the same time frame last year.
Focus Shift From GMV to Loyalty
Bain & Co suggests retailers pick their battles in terms of promotions, targeting a select group of shoppers during shopping festivals that make the cut. Also, retailers should review their partnerships with platforms and switch up their metrics for success.
Alibaba is one e-commerce platform that has made strong progress, said Bain & Co. In the 12 months ending June 30, 2022, it managed to retain 98% of customers who spent more than 10,000 in the previous year.
“Alibaba is relatively ahead of the curve by serving these high-quality consumers,” said Ralph Wu, associate partner at Bain & Co. “If the platform helps its merchants…increase members’ loyalty, the platform and merchants can ultimately benefit because [it] will eventually reflect in GMV growth.”
A report from Shenwan Hongyuan Securities shows that, compared with attracting new members, stable membership operation can reduce user maintenance costs, facilitate the brand to use members’ information and consumption habits to classify them and then provide differentiated services and concrete marketing.
Alibaba also had 25 million members of its 88VIP loyalty program as of June 30, who, on average, spend more than 57,000 yuan each year with the Hangzhou-based firm. 88VIP is a mechanism that helps participating brands and merchants to build stickiness and deepen engagement with consumers across Alibaba’s ecosystem.
Claire Sun, the Omni-SPT Associate Marketing Director of Royal Canin, a pet food brand with 1 million members and a decade-long presence on Tmall, shared the brand’s preparations for this year’s 11.11 and the benefits they have obtained through Alibaba’s platforms. Royal Canin’s 11.11 preparations took a different turn this year, kick-starting the work well in advance and working with Tmall to carry out its first-ever Super Brand Day in the pet food category in September. This enabled the brand to accumulate rich consumer insights and customer assets ahead of 11.11 and gave it strong confidence in its brand strategy for this year’s festival.
This year’s 11.11 has featured close to 40,000 merchants from over 90 countries and regions, offering products from close to 7,000 categories. Alibaba has launched lots of measures, which cover marketing, live-streaming, operation and technology, to help merchants cultivate traffic and build brand loyalty. The platform firmly believes that customer loyalty is the most reliable source of growth for its merchants in the long run.