Bain: 95% of respondents continue to participate in Singles 11, and companies cannot only succeed or fail on GMV

Nearly 80% of respondents want to get a bigger deal on Singles 11 this year than last year, but retailers alone can't guarantee success under the new rules of the game. Bain's "Chinese Retail: Redefining the Success Criteria of Double Eleven" report released today believes that China's retail industry is undergoing changes, and the criteria for measuring the success of Double 11 have also changed, although the merchandise turnover (GMV) is still an important indicator, but retailers have the opportunity to cultivate customer loyalty and acquire customers as the entry point to redefine the success criteria of "Double 11".

In recent years, the "Double 11" and the e-commerce industry itself have gradually matured. According to the Bain report, up to 95% of respondents intend to participate in this year's "Double 11" event. Respondents spent an average of 2104 yuan on "Double 11" last year, of which 52% planned to increase consumer spending this year, and only 8% said they would reduce spending.

Looking forward to this year's "Double Eleven" consumption trend, Bain believes that last year's major trends are expected to continue, driving this year's turnover growth. For example, the penetration rate of lower-tier cities is expected to continue to increase, and the number of consumers participating in "Double Eleven" for the first time in third- and fifth-tier cities this year may exceed that of first- and second-tier cities. Consumer spending in the health care category, which has grown strongly due to the impact of the epidemic, is also likely to continue the growth trend this year, especially in the cosmetics and personal care categories. Overall, many respondents expressed a strong preference for brands they are familiar with (more than 70%) and cost-effective brands (60%).

In recent years, as retailers have entered the market, the number of participating platforms has been increasing, making sales gradually decentralized and competition more and more intense. According to the report, more than 50% of respondents said they plan to go to 3 or more platforms this year, and nearly 80% of respondents want to get a bigger offer than last year.

"A lot of consumers don't mind changing retailers on Singles' Day. For them, the Singles' offer didn't keep them loyal to a single platform. They have too many options and plenty of room to shop around. Retailers can't be indifferent to consumer demand, but offers alone don't guarantee they'll win under the new rules of the game," said Zheng Shuohuai, Global Partner at Bain & Company and Chairman of Retail in Greater China.

Zheng Shuohuai believes that retailers and brands should not only focus on commodity turnover, but also pay attention to how to achieve sustainable growth and improve profit margins. He suggested that retailers and brands redefine the success criteria of "Double 11" with a focus on customer lifetime value and Net Promoter Value as the entry point for customer loyalty, so as to establish a more sustainable and defensive long-term value proposition, "Such a shift can help retailers stay active throughout the year, not just short-lived at the 'Double 11' shopping festival." ”

The report shows that consumers who strongly support retailers in the "Double 11" campaign have high consumer spending on the same platform throughout the year. "While consumers' penchant for big deals is unlikely to change in the short term, some leading retailers have made some progress in cultivating 'Double 11' customer support, and consumers are no longer limited to simple reasons like 'here's what's selling well and cheaply', laying the foundation for retailers to build a more lasting differentiation." Yang Dakun, a global partner at Bain & Company, pointed out.

Yang Dakun believes that the majority of retailers need to find firm core users through in-depth mining, and these "pure fans" are the basis for re-establishing the advantages of differentiation strategy.

At this stage, China's retail industry is approaching a node, and any growth strategy is inseparable from the loyalty strategy. Companies that occupy the leading position in the new stage focus not only on turnover, average monthly users and average user revenue contribution, but also on a wider range and more numerous indicators. They also evaluate their performance using metrics such as NPS, customer retention, operating profit, and customer lifetime value. These companies no longer rely too much on "Double 11" because the rise of more promotions throughout the year has given them more investment options and goals.

Bain suggests that retailers and brands' executive teams can think from three perspectives to accelerate the shift to a customer loyalty-led model: First, look at a broader time horizon so that the company's "Double 11" strategy can target the most valuable customers, and transform the "Double 11" value proposition from a simple functional element to build customer loyalty. Second, when taking action, companies should take customer loyalty as a core point, and systematically measure and track customer lifetime value. Third, when reinventing the business, companies need to establish differentiation to weaken their dependence on promotions.

Author: Xu Jinghui

Edit: Zhang Tianchi