Lessons for marketers from China's e-commerce 618 Festival

Until June 18, Chinese e-commerce powerhouse JD.com is holding its annual 618 Festival, one of the biggest retail events in the world. Last year the festival generated $17.6 billion in sales on JD.com's platform alone (whereas Black Friday sales in the US totaled just $5 billion). Even major rivals to JD.com like Alibaba, Amazon, and Kaola geared up for and participated in this event.

The success of Alibaba’s Singles Day on November 11 has driven many Chinese online retailers to create their own holiday sales event. JD.com is one and its 618 festival stands out due to the company’s strong reputation in e-commerce, leveraging its cutting-edge technology and in-house logistics services to meet the needs of Chinese customers.

Here are some lessons from the 618 festival that US retailers can apply to major e-commerce events:

Campaign strategy

  • Do you want to increase the average value of your shopping cart or the number of customers you attract?
  • Increasing average basket value during 618 is hard – customers often expect retailers to bear the costs for logistics and import taxes.
  • To recruit more customers, some retailers may adopt non-profitable discounting policies for certain merchandise. Watch out for this and differentiate your merchandising strategy.
  • For independent e-commerce sites, competing with major marketplaces during the final days of the 618 festival is difficult. Their best chance is to drive traffic a week or two prior to the event.

From competing prices to competing services

  • Customers want lower prices, but retailers shouldn’t just compete on price.
  • Customers expect faster logistics and a good shopping experience.
  • Retailers have to stock up on inventory – running out of stock will severely impact the customer experience and your exposure in the marketplace.

Get started early

Brands and retailers typically begin planning in the two months before the 618 festival. The goal is simple: to bid for valuable space on JD.com, either through increasing the advertising budget or offering heavy discounts or exclusive offers. JD.com usually evaluates submissions by assessing historical sales volumes, past promotions, product popularity and more. Back-and-forth negotiations are typical if retailers want good deals with marketplaces. Starting early will give retailers more time and flexibility to fully prepare inventory, logistics and promotions.

 

Azoya’s partner retailer Babyhaven launches 618 promotions early to avoid competing for traffic

Be smart when voicing your brand

Marketers today have more options, such as Tencent’s WeChat mini-program platform and the rising popularity of short videos in e-commerce marketing. While key opinion leaders (KOLs) remain important influencers during the 618 festival, retailers should calculate their ROI carefully when using them, as rates for KOL influencer marketing can be twice as expensive for 618. Back-and-forth negotiations are typical if retailers want good deals with marketplaces. Starting early will give retailers more time and flexibility to fully prepare inventory, logistics and promotions.

 

 

 

 

Targeting the right customer group with appropriate content and promotions is important. KOLs are more like multiplier effects that can amplify the reach of your message and branding. When negotiating with KOLs, brands and retailers should also consider what they can offer to KOLs apart from monetary incentives, such as co-branding events or customized gift sets. These catchy marketing stunts are less expensive to sponsor and quite effective in converting viewers to sales.

 

Franklin Chu, managing director of Azoya USA, is an expert in China cross-border e-commerce.  Franklin also serves as President of Sage Capital Group Inc. a private equity and investment management firm and is a graduate of Yale University and Harvard Business School.

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