Alibaba’s ‘8.8’: special days, strategic sales and the effect on brand value

Boxing Day Sales, Black Friday, Cyber Monday, and now…August 8th?

As you may have seen in the media, yesterday was a special day in China. The number 8 has an auspicious meaning in Chinese culture, and as such 08/08 is treated with particular positive regard and good fortune.

In the manner of Amazon’s Prime Day, to mark August 8th Chinese marketplace giant Alibaba last year held ‘8.8’, a 24-hour shopping extravaganza on its international shopping Tmall site to promote its global product offering. For this year’s incarnation, British grocer Sainsbury’s announced it would be doubling the number of products it sold via Tmall to 100 – mainly high-quality British produce ranging from tea, to honey, to granola.

This is clearly a positive strategic move by the supermarket chain designed to increase its global brand presence as well as boost sales, particularly in response to increased market demand for high-quality international products in China, as pointed out by John Rogers, Sainsbury’s CFO.

However, it raises questions about the true value of these ‘super-brand day’ events, other examples including another Alibaba venture, the anti-Valentine’s day ‘Singles Day’ in November, or Amazon’s Prime Day (12th July, this year). For the host marketplace, they’re a hugely profitable venture with a positive effect on the relationships with their consumers.  But while it’s a great sales opportunity for the participating brands, does it really have any impact on true brand loyalty? Cultural dynamics with regards to loyalty and spending habits differ hugely from region to region, so Sainsbury’s strengthening of its partnership with Alibaba is likely to pay-off financially, and could plant the seedlings of brand perception into the consciousness of Chinese affluent consumers – especially seeing as they haven’t got a bricks-and-mortar presence in China at this stage. However, there is a time and a place for partnerships focussed around discounting products.

 The whole point of sales days like Black Friday and Cyber Monday, particularly in the large supermarkets and department stores, is exactly that discounting of top-brand products to drive sales – the clue is in the title. Looking at results from last year, the 2015 IBM Black Friday Report showed that the main ‘winners’ were brands such as Samsung, Apple, Beats by Dr Dre, and Sony, although the revenue is going into the pockets of the large multi-brand retail chains  – J.C. Penney, Best Buy, Walmart, Sainsbury’s and the like.

However, with all the frantic queuing and fighting over the latest gadgets, while the supermarket’s bottom line may be happy, softer customer metrics such as NPS and CSAT scores won’t necessarily be positively affected.  If any ‘loyalty’ is being driven at all, it’s to the products being discounted and, perhaps more pertinently, to the day itself. However, because online marketplaces can organise days of mass discounting with their name on it - and this is why Amazon Prime Day succeeds, and why we expect Alibaba’s efforts today to be similar – they wield the double-edged sword of sales success and brand association.

The brands that actually publicly resist these ‘special days’ often get more favourable coverage in the longer term. American outdoor retailer REI won a Titanium Grand Prix at this year’s Cannes Lions festival for their #OptOutside campaign, where they shunned Black Friday, closed all their stores and paid their employees to take the day off and spend it outside. The campaign gained 2.7m PR impressions in the first 24 hours, and 6.7m media impressions in total after a number of other high-profile brands followed suit, including Walmart-owned Asda. While it may have reduced their opportunity for immediate revenue, their brand awareness and value was clearly hugely enriched, and subsequently awarded with a gong from Cannes. The effect on the relationships with consumers, while not impacting them directly, and in fact negatively effecting them in the short-term because of stores not opening, is likely to be far more positive in the long term, highlighting REI as a brand that cares about people, both employees and consumers, not just about profit.

There’s a time and a place for discounting your brand and businesses such as Amazon and Alibaba are way ahead of the curve in breaking away from the traditional Sales Day model, putting on more exclusive, tailored events that resonate with particular audiences. However, do these sales days drive true loyalty? Perhaps, but what we can say is that it has to be wrapped up in good customer experience and as shown by multiple issues on Black Friday such as website downtime, delivery failures, and even in-store chaos, this is often the first thing to fall by the wayside.

With 70% of mass affluent consumers expecting good customer service across all touchpoints, as well as a similar number expecting an ease of doing business with the brands they are most loyal to, it’s clear that brands need to use these events in order to secure loyalty that extends beyond sales. This is particularly important for a brand such as Sainsbury’s that is using 8.8 as a strategic way to build a reputation in a new market. High-profile promotions are a great way in to a new market, but as a brand grows, it’s vital to consider the wider touchpoints that engage customers.