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Is it time for US retailers to focus on Singles Day?

Goodbye, Black Friday and Cyber Monday, hello, Singles Day?

While spending was up in 2017, some experts argue the Thanksgiving shopping weekend has lost its luster and brands looking to not only make a splash again, but also provide a better experience overall, may want to turn their attention to the 24-hour, $25-billion shopping extravaganza that is Singles Day, which is looking to expand its borders – and shows no signs of slowing down.

Here’s why.

RIP Black Friday?

According to Adobe, retailers brought in $5.03 billion on Black Friday 2017, which is up from $3.34 billion in 2016.

And, at least according to Adobe’s figures, the results are on par with the $5.01 billion it anticipated in Black Friday sales this year.

For its part, trade association the National Retail Federation (NRF) said 70% of the US consumers thinking about shopping over the holiday weekend — or 115 million people – would shop on Black Friday while 48% – or 78 million – were expected to shop on Cyber Monday.

That’s compared to 74% of shoppers who told the NRF they planned to shop on Black Friday 2016.

Nevertheless, the NRF estimates US consumers will spend $680 billion throughout the 2017 holiday season, which is up from $655.8 billion in 2016.

And yet there’s some speculation Black Friday – a holiday of sorts that can be traced back to 1950s Philadelphia — may have peaked – or even be dead, as the Washington Post recently declared.

The Post cited data from professional services network PwC, which found only 35% of consumers planned to shop on Black Friday this year, marking a steady decline from 51% in 2016 and 59% in 2015 – in part because consumers are getting used to nabbing deals all year long, like during Amazon’s 30-hour Prime Day, which kicked off July 10.

“Black Friday has lost its significance,” PwC’s Steven Barr told the Post. “Retailers have conditioned the consumer to believe everything’s on sale every day, which means the deals on Black Friday are not significantly different from any other time.”

Indeed, Reuters observed “little evidence of the delirious shopper frenzy customary of Black Fridays from past years” this year.

And when it comes to Millennial and Gen Z shoppers specifically, 75% reportedly said they plan to shop throughout the holiday season rather than on Black Friday specifically and, Forbes noted, brands like outdoor retailer REI have gotten a lot of press out of closing on Black Friday.

The Boston Globe reported retailers looking to lure consumers in on Black Friday have to offer more than discounts, pointing to brands like Target, which is offering toy demos, hot chocolate, Santa photos and cookie decorating, as well as Walmart, which is hosting shopping parties.

Brands are also shifting ad budgets to Amazon.

According to Daniel Olduck, executive vice president of global strategy at Acronym, the agency has seen a substantial increase in the focus on Amazon as an advertising platform this year across all its clients. Spurred by strong results with CPC ad platform Amazon Marketing Services, these clients have either found new budgets or moved existing budgets onto the platform.

“Of course, we’ve seen competitors move in a similar direction, so, overall, the space is becoming more competitive and expensive,” he added. “This has increased the need for synergy across search, shopping and Amazon, meaning budget allocations are more delicate and require thought over which product or keyword types…are more profitable as few brands have the funds to compete everywhere, especially against the big box retailers. What’s more, the fact that these players are both the competition and the advertising platform has left a number of brands in tricky positions regarding how to prioritize their funds, particularly for the holidays.”

Much of the prep work for Thanksgiving weekend was focused on audiences and personalization, Olduck said.

“Having the right promos promptly is critical, but having the right promos combined with the right [call to action (CTA)] for specific audiences with personalized ad copy is something that most brands are much better with this year, but there’s always room for improvement,” he added.

He also said Acronym is seeing various approaches to how advertising dollars are spent the week of Black Friday.

“Generally, we’ve seen more of a trend towards treating it as a general two-week focus period, with heavier days versus an emphasis on single days in particular,” Olduck added. “This is both in an attempt to better distribute funds on less competitive days, but also to better respond to the demand that we see pick up earlier and drop off later beyond the Black Friday/Cyber Monday days themselves.”

Black November

Indeed, it’s no longer one marquis shopping day.

An analyst in the Globe even posited Black Friday has been replaced by Black November in part because consumers have started making purchases earlier thanks to a new kind of Christmas creep – a holiday sale creep, if you will – and, as noted, consumers are conditioned to expect year-long deals.

Further, a story in Forbes argued “US retailers might be smart to shift their focus to Singles Day instead of Black Friday” because: 1) Consumers don’t have to go to stores to shop – and they know about Black Friday deals ahead of time; and 2) Black Friday strains operations, including the supply chain, inventory, staff and logistics, which is often detrimental to the customer experience.

Contributor Nikki Baird’s solution is to spread out holiday shopping over a longer period:

It might be true that one retailer might not be able to change consumer buying behavior in general, but if a bunch of them got behind something like Singles Day – an established shopping holiday that is only set to get bigger and garner more attention in the future – that might be enough to have an impact…Whether consumers really want to think about holiday shopping earlier or not, the reality is, if enough retailers break from the pack, then the whole pack will respond.

 

See above re: holiday sale creep.

Baird also pointed to the UK’s adoption of Black Friday as proof “one country’s shopping holidays can be exported to other countries.”

Singles Day

So what exactly is Singles Day?

According to the New York Times, Singles Day is the Black-Friday-like shopping day in November in which consumers in China spent $1 billion in the first two minutes en route to $25.3 billion overall, marking an increase of 39% over the prior year.

More than 140,000 brands and merchants participated (which is reportedly up more than 40% from last year) with 15 million products listed – including goods from Japan, the US, Australia, Germany and South Korea – and cloud computing company Alibaba Cloud processing 325,000 orders per second at its peak. What’s more, 90% of transactions were settled through mobile and online payment platform Alipay, which is up from 82% in 2016.

In 2016, ecommerce conglomerate Alibaba said nearly 100,000 brands and merchants participated and consumers spent $17.8 billion. (That was up from $14 billion in 2015.) It’s also likely why Forbes called it “the biggest shopping day on earth.”

Singles Day is also known as the 11.11 shopping festival. It began in 2009 to raise awareness of online shopping. (Although the Times says it actually originated decades earlier as a protest against Valentine’s Day because 11/11 is “associated with unattached singles, known as ‘bare sticks.’”)

Singles Day is now strongly associated with Alibaba because it is the platform that turned it into a “mercantile extravaganza” that far eclipses the $1 billion spent on Amazon’s Prime Day.

Singles Day v. Black Friday

Part of this, Baird observed, is thanks to sheer numbers. China’s middle class is expected to grow to 550 million by 2022 – nearly double the 340 million middle class citizens in the US.

But US retailers may still be able to learn a thing or two from Singles Day.

One key difference between Singles Day and Black Friday is the emphasis on entertainment – and the fusion of retail and entertainment in particular – during the former.

The countdown gala leading up to the event was directed by one of the producers involved in the 2016 Oscars and included celebrities like Nicole Kidman, Pharrell Williams, Maria Sharapova and Fan Bingbing.

“It’s almost like the Academy Awards, a New Year’s celebration and the Super Bowl all in one,” contributor Helen Wang wrote in Forbes.

And, interestingly, the gala counted down to the moment when 60,000 brands released their deals to shoppers, lending the event an aura of anticipation and element of surprise not found as much on Black Friday anymore.

Singles Day – and Alibaba – also take advantage of cutting-edge technology to enhance the shopping experience. Per CMO.com, this includes facial recognition and mobile gamification. And, last year, Alibaba focused on integrating VR and AR, Wang said.

This is not to say US retailers are necessarily Luddites.

Amazon, arguably the Alibaba of the West, enables customers to tap into AR to see “thousands of items in their space before they buy.” It also encouraged voice shopping by releasing deals earlier via Alexa and it rolled out Amazon Key, a service that allows Prime members to have packages securely delivered inside their homes, in 37 cities.

The Amazon app also reportedly has an X-ray feature that allows recipients to scan barcodes to see what’s inside packages.

It’s also hard to bet against Amazon CEO Jeff Bezos, the $100 billion man.

And yet as Alibaba looks to take Singles Day further afield – even taking its star-studded gala overseas “soon,” Amazon and/or Bezos may be sweating a little.

Alibaba vendor John McPheters told the FT, “It has tremendous staying power…I think we’ll see much more 11.11 Singles Day activity in the US as it continues to grow.”

And he’s certainly not alone.

Contributor Michael Zakkour wrote in Forbes that Singles Day 2017 would be a “powerful demonstration of how China is shaping the future of ecommerce, global consumption and supply chains.”

That includes Alibaba founder and executive chairman Jack Ma’s New Retail concept.

In a letter to shareholders, Ma explained:

Ecommerce is rapidly evolving into ‘New Retail.’ The boundary between offline and online commerce disappears as we focus on fulfilling the personalized needs of each customer. In China, our New Retail initiatives are taking shape as the starting point to our ‘Five New’ strategy, comprised of New Retail, New Finance, New Manufacturing, New Technology and New Energy.

 

Ma reportedly also said New Retail will bring about “a restructuring of the global supply chain and change the complexion of globalization from the domain of big companies to small businesses.”

As such, Singles Day also positions Alibaba as “not just as an ecommerce driven company, but a technology, social, financial and entertainment powerhouse that is primed to compete with the FANGS (Facebook, Amazon, Netflix, Google) globally and with the other BAT companies (Baidu and Tencent) in Asia,” Zakkour wrote.

Which, in turn, could mean a whole new kind of Christmas creep for US consumers.

What’s your take? Is it time for US retailers to address Singles Day?

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