Zhou Ying: Singles Day Shopping Spree: A Real Bargain?
Alumni and Public Relations Office 2017-11-14
In 2009, the first Singles Day Shopping Spree saw Chinese consumers splashing a total of 50 million rmb. It was a start of an era, or at least an annual event. This year, the ninth Singles Day set yet another new record of hitting 168.2 billion rmb in sales value in 24 hours.
It also reflects new business models, and new changes in consumers' minds.
This year, Taobao and its competitors adopted new promotion campaigns such as pre-ordering, cash-backs, and deductions or coupons won through online games. These tactics are getting ever more complex, vying for shoppers' attention and time.
The pre-ordering period started as early as Oct 20 and lasted until Nov 10, extending the experience time of consumers and increasing the exposure of brands and products.
More complicated promotion schemes draw customers ever deeper into the system, paying more deposits in advance to secure their desired purchase, while playing an array of app-based games to obtain extra discounts.
In addition, combing online sales with offline storefronts has become a particular focus for Tmall as well as other major e-commerce platforms. Tmall's 'new retail ' and JD.com's 'boundless retail' campaign led to the opening of numerous brick-and-mortar shops all over the world, providing carefully selected products and first-class shopping experiences based on big data analysis.
Psychologist Daniel Kahneman, in his Nobel Prize-winning work, has pointed out that people tend to use reference points, such as the difference between original and current prices when making buying decisions, even when other relevant information, such as the actual price, is also readily available. And these reference points don't always produce rational results.
During the Singles Day event every year, under the continuous bombardment of such campaigns as discounts, 50% off and huge sales, many online shoppers will put the products they want into their shopping carts beforehand, waiting nervously with mobile phones in hand for the clock to strike 12 on November 11 and click pay.
Some would even completely ignore the question of whether or not they actually need certain merchandise, and purchase solely for the delight of enjoying bargain prices. The reference points of dropped costs on Singles Day, in this case, can lead to irrational buying decisions.
People also tend to be biased when it comes to proportions, which is to say that they are more sensitive to changes in proportions when in reality changes in absolute value make more sense. This year's Singles Day campaign wisely harnessed this bias, encouraging consumers to pay in advance and therefore be hooked by the product, be committed to the purchase, by increasing the value of deposits, a 50 yuan deposit could deduct 100 or even 150 yuan on November 11, for example.
Kahneman has also put forward the concept of loss aversion, ie people's tendency to prefer avoiding losses to acquiring equivalent gains. In terms of the Singles Day campaign, those who have paid a deposit earlier would most certainly keep their promises, complete the payment and purchase the goods as the deposit has already raised the threshold of loss in their minds.
On the surface, the one-day shopping extravaganza has created record sales values for some e-commerce firms and brands, and let consumers buy goods with bargain prices. But behind the scene, not everybody has had it so good. When the dust settles, it's important for us to think about the intrinsic value of business.
Online or offline, the essence of commerce, creating values for consumers through the best products and services, remains unchanged. Singles Day will hurt companies and the entire industry and struggle to drive sustainable business development if it only offers price wars and homogenisation.
It should instead pay more attention to nudging companies to provide better products and services, moving toward a win-win solution for platforms, businesses and consumers.
It's a similar story with consumers. The over-consumption and irrational consumption at present is at odds with the original purpose of commerce. With continued shopping upgrade, Chinese consumers will focus less on price and switch to more rational shopping behaviour.
This article (in Chinese) was originally published by The Paper on Nov 12, 2017.