by Ker Zheng
Singles Day is just over a month away, and retailers and brands are ramping up their operations for the big day. Last year, brands racked up an impressive US$30.8 billion in GMV on Alibaba's platforms, Taobao and Tmall.
For many brands, Singles Day and other big e-commerce holidays can account over half of their annual sales. Oftentimes Singles Day can act as a bellwether for how a brand will perform for the rest of the year.
We take a quick look at some of the issues that foreign brands run into and what they can do to prepare.
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Top Issues Foreign Brands & Retailers Run Into
Brands and retailers often have trouble adapting to the sheer size and speed of the China e-commerce market.
Oftentimes the market is much larger than any market they have ever dealt with in the past, and the standards for customer service are high. Customers expect immediate customer service responses, quick delivery, and incentives to get them to buy.
When they don't get it, they have no qualms about going somewhere else.
Below, we highlight some of the biggest issues that foreign brands run into:
1. Running out of inventory. Demand for certain products can spike tremendously during e-commerce holidays, and many retailers refuse to or cannot procure enough inventory due to their smaller balance sheets.
This is especially common when brands from smaller countries in Europe are entering China for the first time, but procure their inventory from a fragmented network of small-scale suppliers.
Sold-out inventory hurts the customer experience and keeps customers from coming back.
2. IT infrastructure cannot handle the surge in web traffic. In many cases, we have seen retailers and brands with independent websites that crash during the top holidays. This can even happen to some of the larger platforms. Retail players should stress test their servers and infrastructure several weeks in advance
3. Logistics providers cannot handle the surge in demand. In many cases, international brands and retailers selling through cross-border e-commerce pick local logistics providers that cannot handle the surge in demand during e-commerce holidays. Others do not stock inventory in advance.
A Singles Day ad on Taobao. Source: Shutterstock
What Brands Can Do to Prepare
Apply for platform-wide promotions with Tmall/JD. The large platforms will place banners with different brand promotions to get users excited for the big day. Brands can apply for these slots and get "free" traffic without having to spend on ads. However, they generally have to provide large discounts to qualify. Apply one month in advance to qualify.
Stock inventory in advance. Retailers and brands should take stock of which items are selling well, and place orders from their suppliers in advance. They should also move high turnover inventory to warehouses in Hong Kong or China free trade zones for quicker delivery. The worst thing that can happen is running out of inventory on the biggest e-commerce day of the year.
Work with KOLs to educate customers about products and campaigns. Influencers play an important role as a medium between brands and different customer bases. They help build trust and also activate sales. Content posts and short videos can do a good job of catching customers' attention, and livestreaming can help convert views into sales.
Launch promotions early. Offering discounts and incentives during the days and weeks leading up to Singles Day is often more cost-effective than doing so on the big day. Many brands and retailers do this for less popular items and reserve their most popular items for the big day when there is less time to educate customers about newer items.
Alibaba promotes Singles Day at the New York Stock Exchange in 2015. Source: Shutterstock
What to Do After Singles Day?
Process returns and thank your customers. Apologize for any delays in delivery and send coupons to disappointed customers. Going out of the way to cater to Chinese customers can go a long way in maintaining brand loyalty.
Save leftover inventory for the next holiday. After Singles Day, there is Black Friday for imported goods and Double 12 (Dec 12) for general merchandise. It is common for brands and retailers to sell leftover inventory from Singles Day during these holidays.
Take stock of what worked and didn't work. Singles Day is oftentimes a bellwether for how a brand will perform during the rest of the year. Traffic acquisition costs are quite high, however, so don't be discouraged if the ROI isn't as high as you expected it to be. Lessons learned can be applied to the next e-commerce holiday.
For more information on Singles Day and Chinese e-commerce holidays, download our 19-page e-book by clicking here.