How effective is Alibaba's Single Day's targeting of 16-25s (Generation Z) using digital promotion, global collaboration, fashion innovation and celebrity endorsement, and which factor driven them the most?
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Acknowledgement
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Abstract
Alibaba is effectively using Singles Day to boost its sales every year. What was previously known as a celebration day has now become sensation in the consumer market which is especially true with online shopping trend in China thanks to higher usage of internet, social media, and digital marketing among Chinese consumers. Various factors and strategies of Alibaba play role in driving this online shopping trend among consumers on Singles Day. Among these strategies, celebrity endorsements, digital promotion, fashion innovation, and global collaboration are believed to be aggressively followed by Alibaba for driving consumer behaviour on Singles Day sales. The current study therefore examined the consumer behaviour of Singles Day Sales and factors driving this consumer among Generation Z Chinese consumers.
Purpose: The purpose of this research was to examine how effective is Alibaba's Single Day's targeting of Generation Z using digital promotion, global collaboration, fashion innovation and celebrity endorsement, and which factor driven them the most. By employing "Fishbein and Ajzen's Theory of Reasoned Action (TRA)" as a theoretical framework, the researcher examined which factors of Alibaba Singles Day influence beliefs, attitudes, and behavioural intentions of Chinese consumers towards Alibaba Singles Day. The consumers' beliefs regarding holiday shopping events like Alibaba Singles Day were represented by benefits and concerns associated with Alibaba, which were captured by hedonic and utilitarian elements of shopping
Method: The research adopted quantitative research method and questionnaire survey method for achieving the research objectives of the study. An 8-item online survey questionnaire employed to gather the responses of questionnaire survey from target participants regarding their consumer behaviour related to Alibaba Singles Day. The total number of participants participated in the survey were 313 Generation Z Chinese consumers of Alibaba.
Results: The study concluded that digital promotion (advertising campaign), global collaboration (discount on global products), fashion innovation (Singles day recommend favourite items, low price, and seeing and contributing in sales event) and celebrity endorsement significantly affect on purchase behaviours of Alibaba Singles Day sales. The findings of this study supported that both hedonic and utilitarian beliefs about Alibaba Singles Day have a stronger positive relationship with attitude towards Alibaba Singles Day.
Background of the Study
Alibaba Singles’ Day has emerged as a global annual, 24-hour holiday shopping carnival, which has become the world’s biggest holiday shopping event. Alibaba Singles’ Day generated $17.8 billion in sales in 2016, dwarfing combined sales of Thanksgiving Day + Black Friday’s mere $4.7 billion Cyber Monday’s mere $3.7 billion in worldwide sales (Richter, 2017). Alibaba Singles Day event is a widely popular Chinese celebrated holiday shopping event that held every year on November 11 in spirit of somewhat old Chinese tradition of single people celebrating this day as an alternative version of Valentine’s Day for their unattached, non-committed and single status (Lin, 2017). In last year 2017, Alibaba Singles Day shattered all the records of a holiday shopping event by becoming the highest grossing shopping event in the world (Alibaba Group, 2016). Online buyers purchase various products worth around $25.3 billion from Alibaba.com and Alibaba’s platforms (Tmal and Toabao) on November 11, 2017 (see figure 1.1). Compared to these revenues, the similar holiday shopping events like Black Friday and Cyber Monday, which are mostly celebrated in western countries, look like celebrations of frugality. While Thanksgiving is likely record higher sales in United States e-commerce history by end of 2018, it is estimated that its sales will not come close to matching Alibaba Singles Day (Richter, 2017).
Every year on November 11, Alibaba Singles Day is celebrated by Jack Ma, the founder of Alibaba, on a stage at huge gala event which begins with counting down to beginning of the sale to midnight of November 11 (Fortune, 2017). Not only that, Alibaba brings many top celebrities to share the stage with Jack Ma which includes international stars like Nichole Kidman, Scarlet Johansson, Maria Sharapova, David Beckham, Kobe Bryant as well as Chinese singers and actors like Pharrell Williams, Bingbing, Karen Mok among other celebrities (Lin, 2017). Hugely endorsed with these celebrities, Alibaba gala event provides a unique entertainment and shopping experience to their consumers (Wang, 2017).
The digital promotion of Alibaba also gives a feeling to the event like New Year’s Celebration, Academy Awards, and the Superbowl. Through digital promotion, Alibaba engages their consumers through fashion innovation where consumers experience “See Now Buy Now” fashion shows live at event gala and also from their home on TV screens. They also offer their online consumers to use interactive apps to download various giveaways, gift cards, coupons, certificates, raffle tickets etc (Wang, 2017).
Another strategy of Alibaba Singles Day, which makes it standout among other shopping events, is its global collaboration with different global and Chinese brands who participate on the shopping day. In its global collaboration, Alibaba uses “uni-marketing” strategy to help their collaborative brands to target the right consumers from Alibaba Singles Day platform (Fortune, 2017). Various global brands like Starbucks, PandG, France's L'Oréal SA, Nike, Bose, GAP, Estee Lauder etc. have enjoyed success through Alibaba Singles Day. Small brands from China and other countries are also welcomed by Alibaba on singles day event. It is reported that around 15 million products are listed on Alibaba Singles Day in 2017. Among the most bought items in Alibaba Singles Day were in baby and wellness product lines like diapers, milk powder and multivitamins. Further, products originated from South Korea, Australia, U.S. Japan, and Germany were the most popular among the Chinese consumers (Wang, 2017).
From 2017 sales, Alibaba Single’s day has sold out around 812 million orders. Alibaba focuses on usage of artificial intelligence systems for smart logistics practices, which enables fast delivery from nearby stores and warehouses. This makes Alibaba to deliver the order in maximum 12.18 minutes after the purchase is made by customer on online (Fortune, 2017). All the payments of these orders are processed through Alipay among which 90% are reported to be transacted through mobile phones. All these strategies lead Alibaba to record breaking sales of $25.3 billion on a single day of November 11, 2017. These sales numbers are considerably higher compared to Cyber Monday and Black Friday which combined reported sales of $6.79 billion in U.S. in 2016 (Wang, 2017).
The success of Alibaba is largely attributed to effective execution of these strategies and it is also considered that these strategies may influence consumer behaviour of their potential young consumers which drive them to eagerly wait and purchase every year on day of the sale (Wang, 2017). Unlike other shopping events, Alibaba Singles Day, through its strategies of digital promotion, global promotion, fashion innovation, and celebrity endorsement, offers their consumers with intelligent recommendations and personalised experience, which may have contributed to influence the consumer behaviour of their consumers and ultimately the success of Alibaba Singles Day event. Alibaba is using AI technology, virtual reality, and augmented reality in to shopping to achieve retail innovation and success (Wang, 2017). However, till date, it has not been studied whether these are likely factors which influenced on consumer behaviour and which factor drive most to consumer behaviour on Alibaba Singles Day.
Statement of the Problem
While Alibaba remains the market leader of e-commerce in China in relation to sales and merchandise, it is because of their annual shopping carnival (OSC) which they held on same Singles’ Day 11th November which makes Alibaba global leader of e-commerce (Xu et al., 2017). In theory of carnival and annual shopping carnival (OSC), Alibaba Singles Day is considered the best example of success in holiday shopping carnival or event since its debut in year 2009 in China (Wu, Peng, Li and Chen, 2016). It is also considered to be largest event than Black Friday celebrated in western countries (Wu, Peng, Li and Chen, 2016). Given its large consumer base in China and other parts of the world, who wait for this date every year in discounted prices, Singles Day is equally popular among people from all walks of life with young single consumers being its potential buyers (Xu et al., 2017).
The frenzy consumers, who wait for this event to come every year, exhibit the power of online herd behaviour where they interact, share, and talk about their purchases with others during the global Alibaba Singles Day sales (Xu et al., 2017; Wu, Peng, Li and Chen, 2016). This therefore provides an interesting context to examine the behaviour of those consumers. Every year, Alibaba OSC starts on the middle of the October and goes through the November 11 Singles day shopping day (Lin, 2017). Before the day of Singles Day sales, the consumers tend to engage in this event by not interacting with others but also by attending some live shows and playing some online shopping games which they could collect the discount coupons and gift cards for shopping day. These gift cards and coupons are used by consumers on the shopping day to get the discounts and offset product prices by using the codes on them (Xu et al., 2017; Wu, Peng, Li and Chen, 2016). According to Wu, Li, and Kee (2016) and Alizila (2016a, b), the sales of Alibaba Singles Day has seen steady growth in terms of sales since its launch in year 2009. While there are many studies which have studied on the factors that drive this event, there is little research which factors drive most. The current study was aimed at examining how effective is Alibaba’s Single Day’s targeting of Generation Z (16-25 year old) using digital promotion, global collaboration, fashion innovation and celebrity endorsement, and which factor driven them the most. By employing “Fishbein and Ajzen’s Theory of Reasoned Action (TRA)” as a theoretical framework, the researcher examined which factors of Alibaba Singles Day influence beliefs, attitudes, and behavioural intentions of Chinese consumers towards Alibaba Singles Day. The theoretical framework and conceptual model of this study have been further discussed in detail in next chapter.
Aim and Objectives
The purpose of this research was to examine how effective is Alibaba’s Single Day’s targeting of Generation Z using digital promotion, global collaboration, fashion innovation and celebrity endorsement, and which factor driven them the most. The study specifically intended to address the following objectives:
Analyse the behaviour of young Chinese consumers towards Alibaba Singles Day
Analyse the attitude of young Chinese consumers towards Alibaba Singles Day Sales as observed through perceptions towards Alibaba Singles Day Sales
Explore Hedonic/ Utilitarian beliefs of young Chinese consumers towards Alibaba Singles Day as observed through drivers of and familiarity with Alibaba Singles Day Sales
Examinine Need of Touch of young Chinese consumers towards Alibaba Singles Day as observed through Items Purchased from Alibaba Singles day Sales
Understand behavioural intentions of young Chinese consumers towards Alibaba Singles Day Sales as observed through effects of Alibaba Singles Day Sales
Analyse differences between consumer behaviour of Male and Female young Chinese consumers towards Alibaba Singles Day
Analyse correlations between different factors of consumer behaviour affecting Alibaba Singles Day Sales
Analyse the impact of digital promotion, global collaboration, fashion innovation and celebrity endorsement of Alibaba Singles Day sales on purchase behaviours and which factor driven them the most
Research Questions
RQ1: What is the behaviour of young Chinese consumers towards Alibaba Singles Day?
RQ2: What is the attitude of young Chinese consumers towards Alibaba Singles Day Sales as observed through perceptions towards Alibaba Singles Day Sales?
RQ3: What are the Hedonic/ Utilitarian beliefs of young Chinese consumers towards Alibaba Singles Day as observed through drivers of and familiarity with Alibaba Singles Day Sales?
RQ4: What is the Need of Touch of young Chinese consumers towards Alibaba Singles Day as observed through Items Purchased from Alibaba Singles day Sales?
RQ5: What are the behavioural intentions of young Chinese consumers towards Alibaba Singles Day Sales as observed through effects of Alibaba Singles Day Sales?
RQ6: Is there a difference between consumer behaviour of Male and Female young Chinese consumers towards Alibaba Singles Day?
RQ7: What are correlations between different factors of consumer behaviour affecting Alibaba Singles Day Sales?
RQ8: What is the impact of digital promotion, global collaboration, fashion innovation and celebrity endorsement of Alibaba Singles Day sales on purchase behaviours and which factor driven them the most?
Significance and Rationale
The rapid growth of online shopping and e-commence has provided new opportunities for businesses to conduct their business through Singles Day not only in China but across the world (Joines, Scherer, and Scheufele, 2003). Due to massive increase in the sales volume of e-commence market in China, there is significant growth reported in online shopping in Asia-Pacific region thereby making it the biggest country in e-commence region (eMarketer, 2014a). The opportunity to tap this market has also been recently adopted by largest China-based global e-commerce giant, Alibaba Group, who is increasing collaborating with international brands and suppliers for selling their products on Alibaba platform (eMarketer, 2014b). Singles Day is now considered to be the largest online shopping event in the world surpassing US Cyber Monday in terms of sales.
Various factors are considered to have an effective role in driving consumer behaviour of young consumers or Generation Z consumers on the Single Day. Among these factors are digital promotion, global collaboration, fashion innovation and celebrity endorsement that are aggressively pursued by Alibaba to attract the consumers. Exploring whether these factors or strategies are effective in driving consumer behaviour and also which among them is most effective can provide insights to Alibaba and its sellers in their marketing strategies of attracting new consumers from China and from different parts of the world.
Organisation of the Study
This current study was organised into six chapters. Chapter 1 provided the overview of the study along with problem, aims and objectives, and research questions to be investigated. It also provided significance and rationale to conduct this study. In next, chapter 2 presented a comprehensive review of literature related to the topics that are expected to support the research contribution. The chapter discussed theoretical framework followed by conceptual model that was employed for addressing the research questions. Chapter 3 then presented the research strategy chosen for this study. It also included information about the target population, the sampling frame and the sample size. Following that, the development of instrument along with reliability measures was discussed. Furthermore, this chapter included an explanation about the procedure of collecting the data as well as the procedure to analyse the data. Chapter 4 presented and analysed the collected data. Chapter 5 provided analysis and discussion about the results obtained from the data. Lastly, chapter 6 provided the conclusions and recommendations.
Literature Review
The purpose of this research was to examine how effective is Alibaba’s Single Day’s targeting of Generation Z using digital promotion, global collaboration, fashion innovation and celebrity endorsement, and which factor driven them the most. This chapter of the study presented the literature review from previous studies. The chapter began with overview of Alibaba Singles Day shopping event and understanding different factors influencing Alibaba Singles Day. Following this, the chapter discussed the theoretical framework adopted for the current research. In this regards, theory of reasoned action was discussed. Following this, different components of theoretical framework were discussed and then conceptual framework was presented.
Alibaba Singles Day Shopping Event
Alibaba Singles Day can be seen as the ultimate e-commerce holiday shopping event, it is increasingly gaining attention and diversified channels to reach these potential groups. It is reported that Singles Day event generated revenue of around 25.3 Billion USD for Alibaba which leads to 56% growth in Alibaba sales compared to last year (BBC News, 2018). There are various strategies used by Alibaba to increase the consumer attention and shopping experience on Alibaba Singles Day sales. The most important among these are digital promotion, global collaboration, fashion innovation, and celebrity endorsement.
Digital Promotion
Digital promotion or digital marketing can be defined as “the use of one or more forms of electronic media to market or advertise a product or brand. Marketing or advertising platforms that may be used can include social media, electronic billboards, mobile phones and tablets” (Business Dictionary, 2018). Digital promotions are used to advertise the product in order to stimulate the consumer behaviour especially the consumers’ beliefs for perceived benefits from the product. Perceived benefits are beliefs that something positive will occur from a perceived threat (Chandon, Wansink, and Laurent, 2000). For example, consumers related sales promotions with monetary savings. However, sales promotions also provided other benefits beyond monetary savings. Chandon et al. (2000) discovered monetary, and nonmonetary promotions satisfied a consumer’s desire for value, entertainment and exploration (hedonic benefits) and savings, higher product quality, and convenience (utilitarian benefits).
Digital promotions can be both hedonic and utilitarian because they allow consumers to maximise shopping behaviour. Chitturi, Raghunathan, and Mahajan (2008) indicated that “hedonic benefits” elicited emotions such as cheerfulness and excitement (promotion), and utilitarian benefits evoked confidence and security (prevention) emotions. According to Chitturi et al. (2008), promotion and prevention were antecedents to delight and satisfaction, which improved “word-of-mouth” and influenced “repurchase intentions”. If delighting and satisfying consumers affected “word-of-mouth” and influenced “repurchase intentions”, then merchants need to appeal to hedonic and utilitarian benefits when promoting products.
In terms of Alibaba Singles Day, Alibaba also focuses on new digital promotion and marketing gimmicks every year to attract their consumers and allow consumers to maximise shopping behaviour through perceived benefits (Zakkour, 2017). For 2017 event, Alibaba uses digital promotion which includes “see-now-buy-now model”, virtual reality, and online-to-offline methods. Before 2017 event, Alibaba announced its full lineup of events, promotions, and technologies. Itscelebrity-driven “countdown gala” was headlined in 2017 event by global music impresario Pharrell, superstar actress Zhang Ziyi, pianist Liang Liang, and many other "surprise guests." The four-hour gala, which was watched by more than 400 million people in China in 2017, was produced by Emmy-winning Oscars producer David Hill. The event was fully interactive: People watching at home were able to "Watch Now-Buy Now," direct the action on the stage, and collect prizes and receive digital "red envelopes" (cash) (Zakkour, 2017).
In its unique digital promotion, Alibaba also launched a game similar to a popular mobile game “Pokémon Go-like” which is not only popular among their consumers but also among general people especially young people all over the world (Chen, 2016). The game is considered to be highly addictive among players where they need catch the different branded Tmall Cat mascots which allow them reward points that can be redeemed for various discounts and prizes on Alibaba Singles Day (see figure 2.1).
Another unique digital promotion strategy of Alibaba is AI’s enabled Alibaba’s Buy+ (see figure 2.2). This system enables consumers to either wear a virtual reality (VR) head set or VR cardboard (buy purchasing a plan around 15 cents which is similar to Google Cardboard) and make a purchase a in virtual reality by looking a floating buy button in VR environment (Arnott, 2016). While this system is new and its share of sale from Alibaba Singles is still unclear, there is growing popularity among consumers which likely give some record break in sales in 2018 event (Chen, 2016). In its social media digital campaign, Alibaba has created various “buzz” channels in last year. They have created various campaigns to ensure that consumers continue to be excited about event (Arnott, 2016).
Alibaba Singles Day is not just limited to online in 2017 but also it becomes visible through offline channels. Tmall and Taobao sent digital coupons to their consumers on Singles Day that can be availed from physical stores of participating brands in global collaboration. For instance, Uniqlo, a participating brand, offers the consumers to select their designs either from their own stores or from platforms of Tmall to get 50% off on their selected products. Some of these offers can also be availed after the day of the sales. Alibaba offers this online-offline channel through “WeChat” app for their participating brands and consumers (see figure 2.3)
Global Collaboration
One of the most successful strategies of Alibaba for Singles Day is to collaborate with different international and local Chinese brands. More than 14,000 global merchants collaborated with Alibaba for Singles Day sales in 2017 (Hsu, 2017). Alibaba offers Tmall and Taobao to these merchants to sell their products. Various international brands like Starbucks, PandG, France's L'Oréal SA, Nike, Bose, GAP, Estee Lauder etc have already achieved the success. In 2017, some new entrants like Apple, Target, Burberry, Maserati, Victoria’s Secret, and Sephora also entered in collaboration with Alibaba on Singles Day. Together, international brands reported to have more than 30% share in the overall sales of Singles’ Day. Alibaba also encourages many local merchants from China as well as first time from Hong Kong and Taiwan to collaborate in the 2017 event (Hsu, 2017). Through its digital map, Alibaba allows its merchants to evaluate their sales, trends, top searches and countries of their consumers for better strategies (see figure 2.4).
In its global collaboration, Alibaba is also focusing on bringing Chinese brands to international markets on Singles Day. In the upcoming events, Alibaba for its Singles Day will be bringing 100 Chinese brands overseas through its platform Tmall. The main focus of this strategy is to target 100 million Chinese consumers living in various parts of Asia, Europe and other parts of the world (Zakkour, 2017).
Fashion Innovation
Over the years, technology has played a key role in bringing innovation in fashion industry. Through fashion innovation, live fashion shows and virtual reality dressing rooms, technology has attracted various consumers especially in young age group (Jourdan, 2017). Alibaba has firmly positioned itself as not just an e-commerce 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.
Alibaba is focusing on bringing fashion innovation through virtual reality such as Buy+ as previously discussed and Fashion AI (see figure 2.5). Through FashionAI, Alibaba provides their online consumers on Singles Day, especially those who are looking for apparel fashion products, to not only browse through its various products through a large touch screen about the size of a large poster on a wall but also enable consumers to virtually try new apparel and accessories where the screen function as a smart mirror that keep changing the clothing of consumers on a click (Sun, 2017). FashionAI also has a tiny sensor that recognises the item of clothing a consumer wears and then shows several options for matching items that a consumer could flip through a photo album. This system is also personal fashion stylist by which Alibaba is revolutionizing and bring value to the consumers compared to other holiday shopping counterparts (Sun, 2017).
Alibaba is also turning around 100,000 physical stores around China in “Smart Stores” where Alibaba will enable Buy+ and Fashion AI (Jourdan, 2017). The new O2O/Uni-Channel strategy will be most dramatically demonstrated by the integration of Alibaba's newly acquired In-Time department stores, its experimental He Ma stores, its grocery stores and the enabling of of 100,000 convenience stores to become smart centres, tied together with Alibaba's Cloud, Cainiao Logistics, augmented reality and online platforms. They will feature O2O experiences like “browsing, shopping tours, virtual fitting rooms, payments and deliveries” (Jourdan, 2017). In a highly experiential shopping environment like Alibaba Singles Day, consumers desire to virtually browse through products and have a virtually sensory-rich shopping experience (Wu et al., 2016).
Celebrity Endorsement
Celebrity endorsement is an effective marketing strategy (BBC, 2014; Forbes, 2016) because it has positive effects on brand awareness, attention, attitude, recall, and loyalty (Carrillat, D’Astous, and Lazure, 2013; Jin and Phua, 2014). Using media of any kind without seeing celebrity endorsers is uncommon (The New York Times, 2008); they are virtuall
