Welcoming the Online Discount Season: How Southeast Asia Mimics China's Online Phenomenon

For online shoppers, 11.11 has become a shopping phenomenon in itself. The biggest online discount event in China was initiated by e-commerce giant Alibaba, where the discount rates from participating sellers ranged from 25%-70% and set a record $5 billion product sold in the first 90 minutes last year.

Alibaba, which owns online marketplaces Tmall and Taobao, managed to sell products for $14.3 billion during last year's discount period, targeted at 386 million users annual active - a larger number than the population in the US.

Fortune mention this campaign is, quite accurately, as “Black Friday on steroids”.

The combined earnings of Black Friday and Cyber ​​Monday, the largest sales period in North America, amounted to $7.54 billion last year, which, while impressive, accounted for only half of Alibaba's revenue in the same sales period.

11.11 Cultural Background

'Single's Day' originally originated from Nanjing University in 1993 where a group of single people gathered to celebrate their non-attachment status by means of shopping. In 2009, Jack Ma, Chairman of the Alibaba Group, saw this potential and created this online shopping event for young people, positioning today for self-indulgence.

'Single's Day' later gained prominence and was monetized by Alibaba, turning the day into an online shopping show on their marketplace platform and driving business transactions during quiet period in China, between Golden Week in October and Chinese New Year in January to February. It was also first introduced when e-commerce was booming in China, resulting in growth of 5,470% for the “Double 11” discount program during 2009 and 2013.

The company has since made the term their trademark in December 2012, allowing them to take legal action against media outlets that receive advertisements from competitors that specifically use this term.

The 11.11 discount has also reached hundreds of millions of Chinese shoppers outside of big cities like Beijing and Shanghai, who rely on Taobao and Tmall because they don't have big malls in their cities.

The offline marketing program they do too contribute to 11.11 success. By bringing global celebrities such as Daniel Craig and Kevin Spacey to its launch event, Alibaba is making this shopping phenomenon an event worth celebrating.

For the first time since the 11.11 promotion was launched, the Alibaba Group has announced that this year's event will last for 24 days instead of 24 hours. They will also mark the event by introducing Alibaba's virtual reality technology, Buy+, which promises shoppers the thrill of shopping directly into retail stores via a VR headset. This year will also see an 11.11 expansion to Hong Kong and Taiwan.

With the success of Alibaba's 11.11 campaign, it's no surprise that Southeast Asia is then following in China's footsteps. While not celebrating solitude, major online marketplaces such as Lazada and Moxy (now known as Orami) have adopted Alibaba's 11.11 campaign with their own versions.

Online players are under pressure to commit and participate during this period as many big brands and retailers are starting to offer bigger and better discounts thanks to more capital and a greater number of merchants.

In Southeast Asia, marketplaces use the 11.11 period as a litmus test to see how well they perform compared to their competitors in the local market.

11.11 Southeast Asian Version

From recruiting additional staff to making sure shoppers are aware of the discount program, the marketplace uses social media strategies months in advance of the event and calculates stock forecasts to ensure the discount event is a success.

Here's how the biggest players in Southeast Asia are taking advantage of the 11.11 momentum:

Marketing blitz: Social personalization is key

As the largest ecommerce marketplace in the region, Lazada has adapted 11.11 and extended it with their 12.12 event on December 12 and dubbed it as 'The Online Revolution', which started in 2012.

Lazada Thailand recorded growth in their GMV of up to $40 million during 10-12 December 2015 and saw an increase in the growth of their consumer participation. Lazada Thailand notes 300% increase orders compared to the same period in 2014.

“In Thailand, we see that the most successful marketing channels are usually very social,” said Baptiste Le Gal, CMO Lazada Thailand. “Consumer relationship management is the main channel for delivering offers that match their interests.”

Consumer trends have also changed slightly in Thailand. Baptiste noticed that electronics, which used to be the most popular category, have been replaced by categories that are more towards the lifestyle segment such as health & beauty and home appliances on their platform.

mobile adoption which is high in Thailand also contributes to consumer behavior when shopping at Lazada.

Being a mobile-first market means Lazada has to focus on the mobile aspect of their channel and ensure that the Lazada mobile app is optimized to ensure a good user experience during this campaign period. This marketplace has also launched ads 'make your dreams come true' in Singapore, to welcome this great event.

Zalora, Rocket Internet's fashion portal, also follows Rocket's formula by offering discounts of up to 80% for both 11.11 and 12.12. Zalora Indonesia's marketing strategy to promote this campaign was carried out from October to the grand finale at 12.12, starting with the Zalora Great Sale which in progress, which shoppers can use to prepare them for the main event.

“In 2015, overall sales for 12.12 increased by 30 times compared to average sales on a weekday, with participating brands also seeing an increase in sales despite the end of the campaign period,” said Priyanto Lim, Head of Marketplace at Zalora Indonesia.

But giving big discounts is not enough. Zalora Indonesia held online competitions, provided extra prizes and used celebrity endorsements on social media as part of its promotions to create hype for this big discount event. In essence, consumers will be inundated with incentives and triggers to make a purchase.

It seems, speculation that the brand feels stressed to participate and discount fees to be able to compete with other merchants does not reduce the impact of this campaign.

"Contra to what was mentioned in the article, brands are very willing to work with us because they also benefit from the extra traffic [generated]," said Priyanto.

A marketplace for women, Orami focuses on producing original content themed 'Single's Day' and leveraging their community to generate traffic to their website and interact with shoppers instead of carrying out massive promotional campaigns.

"To encourage social media interaction, Orami also uses Facebook as a way to create interaction with users through an online game with the theme of Single's Day," said Shannon Kalayanamitr, co-founder and CMO of Orami.

Targeting mobile-centric regions

Shopee, Garena's mobile shopping platform, released their version of the mega sale for the first time this year, calling it 9.9 on September 9. Benefiting from the rapid growth of the mobile market in the region, the platform targets mobile-first consumers in Thailand by releasing heavily discounted products at regular intervals throughout the day to keep their consumers' anticipation.

The Shopee website even publishes discount schedules ahead of time so shoppers can set alarms for the products they're after, creating a 'ready-set-go' mentality for shoppers to boost competitiveness and make them shop more.

Niche service providers are participating

11.11 has also inspired online service providers in Southeast Asia to follow this online behavior trend.

On-demand grocery provider, HappyFresh Indonesia, offered up to 30% discounts on the most popular products in their marketing campaign last year.

And a new player in the same sector in Thailand, honestbee, is currently working with popular supermarket chain in Thailand, Villa Market to enter the 'daily goods' sector which includes water, fresh food and meat. These items will all be part of the delivery service's big promotional campaign.

When groceries are discounted, shoppers tend to save 'supply', especially when buying online with a wider selection.

"We look at our customers' buying patterns to see what types of goods are popular with shoppers. For example, customers in residential areas often order large volumes of mineral water and fresh fruit, so we had to anticipate that this sector might see a spike in the 11.11 campaign. us," said Piyawat Laiphithak, Marketing Manager at honestbee Thailand.

honestbee also plans to do a 'Singles Day' themed gimmick by giving away snacks such as gummy bears and popcorn for shoppers.

11.11 Logistics: What goes on behind the scenes?

The phrase "it takes an entire village to raise a child" is appropriate here, if we trade children with a large-scale online campaign. How can ecommerce companies ensure optimal functionality during this busy time?

For ecommerce solution providers, aCommerce, they had planned about two months in advance to accommodate the surge in orders for clients participating in this discount event.

"We increased our workforce by three times through temporary contracts and running 24-hour operations during surge times such as 11.11 to ensure customer demand can be met," Phensiri Sathianvongnusar, COO at aCommerce Thailand said.

Temporary staff are hired through the agency and receive 2-3 days of specialized training for their duties prior to this grand sale event.

During surge periods, aCommerce also uses multi-shipping platform to utilize a network of more than 20 couriers to ensure that deliveries are made on time, for best performance and to ensure that no sales are cancelled, as time and speed are of the utmost importance during the campaign period.

"Inventory planning is very important for campaigns like 11.11 and 12.12, so we use historical data from events in previous years to determine what types of products tend to be popular during this discount period and avoid stock shortages," added Phensiri.

For those brands that did not participate in the 11.11 campaign, they are part of the express line which ensures that their products are still a priority throughout the campaign.

A league of its own

Using China's 11.11 campaign as a backdrop, Southeast Asia's online marketplaces carved out a mega sale of their own that couldn't just copy Alibaba to success.

Southeast Asia could potentially leapfrog China with a bang mobile growth in the region and a rising middle class. Big campaigns like 11.11 will continue to grow every year as more consumers go online. Mobile-first platforms like Shopee are already moving fast and capturing the burgeoning mobile market in Southeast Asia, reflecting the rise of mobile shopping in China, where 72% from purchases over the past year when 11.11 came from mobile.

positive response and the duration of the campaign is testament to the region's growing enthusiasm with ecommerce, perhaps a positive indication that we are inching away from shadow china.

- Disclosure: This article was written by Anutra Chatikavanij and translated by Rara Kinasih. The original article can be accessed HERE.

This article is a collaboration between DailySocial and eCommerceIQ.