Bigger than Prime Day and Cyber Monday, Alibaba’s Singles Day brought the company a record $25B in 2017. The major win, however, is the amount of customer data this phenomenon provides the firm, both via its online store and in-person shops, which is resold in aggregate to brand partners.
Singles Day – a massive ‘global shopping party’ created by Chinese retailer Alibaba – began in 2009, the brainchild of CEO Daniel Zhang, as a way of promoting e-commerce in the region. Ahead of the first Singles Day sale, Founder Jack Ma described the rise of a new class of “netrepreneurs.” “The entire Internet will be their marketplace, and the platform will be their office or shop,” he said in an op-ed.
During the annual event, the company rewards shoppers with steep discounts and exclusive offers, and in exchange gains access to hordes of customer data and preferences throughout an intense 24-hour period.
The event grossed $7.8M when it started in 2009 and skyrocketed to $25B in 2017. Now in its 10th year, Zhang views the event as a regional phenomenon that has impacted the way business leaders and product manufacturers view the internet and new technologies as a vital channel.
“The biggest change is how … business people look at the power of the internet. And day one people just think this is a new channel to sell more products, but today most of the businesses … they view digital technology, internet, as an infrastructure to transform their existing business and … go to a new market to serve the new customers,” Zhang said in speech.
Despite the turbulent economic climate in China and the US, Zhang remains hopeful that today’s youth still desire a better lifestyle and will continue to spend as they have in the past.
The true value of data
Data gathered from massive online events like Singles Day may prove even more valuable than the revenue generated itself. It helps businesses selling on its platform to predict inventory numbers, anticipates shopping habits based on real world events (like the change from single-child to double-child policy, resulting in a spike in purchase of items like double strollers) and continually improves the shopping experience, now serving Chinese citizens and more globally.
After its 2014 event, the firm famously noted the sort of predictive analytics it was able to perform based on the billions of customer data points it gleans in a single day.
For instance, Alibaba realized they could use women’s bra sizes to predict their future shopping habits, noting that women who bought larger bra sizes also tended to spend more. They then divided intimate-apparel shoppers into four categories of spending power and found that “65% of women of cup size B fell into the “low” spend category, while those of a size C or higher mostly fit into the “middle” or higher group.” Why? Younger women with less purchasing power may be the ones with smaller bra sizes.
This treasure trove of data is valuable not just to the e-commerce giant itself but to those in a number of adjacent fields, from financial services and healthcare, to film, and building credit profiles for loans. “The next step is how to leverage the e-commerce data into adjacent fields,” vice president Joseph Tsai told Quartz. “For example, if we have a lot of data on what people purchase in terms of food, groceries, as that data going to be helpful when we do healthcare? I think so.”
Can Alibaba continue to outpace growth?
The core strategy for the retailer to keep up with previous records of growth is to focus on international expansion this year. These efforts are being supported byrecent investments like startup Ele.me, who will deliver Starbucks in 11 cities in China, Rural Taobao who will offer coupons for goods across 800 counties, and acquisition Lazada which will roll out promotions across six Southeast Asian countries.
However, real estate deflation, tensions with the US and an overall slump in the Chinese economy, including its advertising sector, may hurt its ability to maintain revenue growth. “The macro slowdown has affected advertisers’ sales performances and thus their online ad spending budgets,” Ella Ji, an analyst at China Renaissance, wrote in a report. As well, the giant continues to face difficulties successfully penetrating the US market thanks to political tensions.
Today, Singles Day is serving as a massive proofpoint for Chinese policy-makers who have made a number of recent changes, including reductions on income tax and tariffs on goods, in an effort to halt the decline of retail growth – down 12 percentage points in the second quarter.
Putting customer data into action
From shopping preferences, to online behavior, to customer reviews, pricing factors and more, detailed customer data affords teams the ability to predict shopping habits and trends. Paired with external data like economic and political factors, changes in discretionary spending or the emergence of new shopping channels, retailers can be better prepared to weather coming storms and shape both marketing and product development strategies moving forward.