A Return to Loyalty
OPINION | Written by Karleitia Bodlovic, Director of Ecommerce , Blink Consulting, MediaCom Nov 3, 2022
In a shock to the commerce world, Alibaba dropped their livestream hosts for the first time in years. Li Jiaqi and Viya, known respectively as China’s king and queen of livestreaming were recently involved in legal controversy and dropped from Taobao and Tmall Singles Day program leaving brands seemingly in the dark after years of high traffic and product sell-outs from the two livestreaming icons.
The sudden change has forced brands to swiftly rethink their plans for the (now) two-week festival, moving away from the expectations of mass amplification and key events with the two celebrity livestreamers and focusing on more strategic ways to sell and connect with their audience.
Li Jiaqui after disappearing for three months, did subsequently return to screens, though on a much smaller scale for a short two-hour event without warning, and without livestreaming partner Viya. Li’s return was said to help bring back confidence to livestreaming on the platforms and help boost brands and merchants’ desires to stock more product for these events.
Though one can argue, rough times were perhaps already on the cards for the e-commerce juggernaut and this alteration to the multi-billion-dollar event was bound to happen sooner or later particularly with the political climate in China right now.
As reported, Alibaba sales growth was at its slowest last year in comparison to previous years. Analysts predict sales are expected to slow, due to the overall slowing Chinese economy, crackdowns on China’s tech sector and ongoing zero-Covid policy.
Merchants and brands utilising Taobao Live and Tmall are now pivoting by focusing on much smaller niche, brand aligned KOLs and livestreamers and concentrating on the longevity of buyers through loyalty vs the non-typical customer profile of the 11:11 discount shopper. They are also applying an omni-channel approach integrating their online and offline experiences to further expand on sales after the event closes.
While Alibaba has dismissed concerns about traffic and its sales this year, shares have fallen roughly two-thirds since 2020, and analysts predict Alibaba cannot maintain the robust growth it once had particularity with the regulatory changes. Furthermore, the recent CCP conference, saw President Xi Jinping calling for “regulating the mechanism of wealth accumulation” while tightening his grip on the country."
With the sudden change in circumstances regarding super hosts Li and Viya, regulation of the tech and e-commerce sector and the slowing Chinese economy, it’s certainly looks like it’s a good time for Chinese merchants and brands to go back to basics and focus on loyalty and value proposition.
In terms of the Australian retail market the emphasis on loyalty has been the subject of e-commerce experts’ guidance forever - it’s not a new topic and it shouldn’t be treated as trend either. Loyalty can be incredibly effective when done right.
Data compiled throughout the pandemic showed a clear distinction that Australian consumers were done with being sold to, they are now seeking value beyond the transaction. Fast forward into November 2022, the RBA announcement on interest rates has again spooked the market when consumers are gearing up for the Christmas sales period.
Consumers are cautious to spend due to current and now potential future cost of living pressures, with the RBA announcing we won’t be out of the dark anytime soon, in fact consumer pressure is expected to continue well into 2023.
With 66% of consumers saying cost of living pressures now mean they have less to spend on non-essential retail shopping (households with a 1 million mortgage loan for example, now pay an extra $1,520 a month). Australian brands, like their Chinese counterparts need to invest into the longevity of current customers and focus on the value proposition.
They need to start utilising behavioural analytics and predictive data to ensure when their customers are ready to shop any gaps are closed and the right interaction is certain. They need to optimise their strategies and filter out any unnecessary content and messaging and design effective journey maps and develop personalised shopping experiences.
Brands need to think beyond short-term priorities like traffic amplification, conversion, and banking numbers at the end of each season. The focus needs to shift to long term customer relationships and pinpointing every interaction you have with customers. This is what will generate long term success while consumers spending habits tighten.
Will the shift to loyalty and focusing on customer longevity pay off for the Alibaba brands who’ve changed their tactics? We will have to wait and see however, Alibaba Group Holding announced on 31st October one week after its official launch, its two flagship sites Taobao and Tmall have already surpassed US$13.8 million within an hour of their first-round pre-event sales and live stream views of Taobao Live in the first hour rose 600% from last year. Furthermore, more than 40 labels on Tmall have membership programs that have now surpassed 10 million members.
All in all, Alibaba remains one of, if not the top e-commerce player to not only own the live streaming market, but continue influence the rest of the world and now looking to reach pioneer status when it comes to customer loyalty and membership programs. Australia once again take note.
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About Karleitia Bodlovic
As Director of Ecommerce for Blink Consulting Mediacom's in house digital transformation consultancy, Karleitia brings over 15 years of marketing, digital and e-commerce experience by helping clients shape their marketing e-commerce capabilities and create elevated digital experiences that meet the customer needs of tomorrow. Karleitia has built several end-to-end e-commerce (B2C, B2B and marketplace) and digital capabilities for some of Australia's most trusted and respected brands. She has won several Australian and International accolades including working on Australia's first ever headless multi-store (HMS) front solution with BigCommerce.
About MediaCom’s Blink Consulting
Blink Consulting is a team focusing on providing consultative and advisory services to MediaCom’s clients by bringing together bespoke team of subject matter experts from our local and global network.
We are built to enable clients with the skillsets, processes, and technology competencies to help them anticipate their needs for tomorrow. We have been delivering results around the globe and recently built local teams to work with Australian clients on the ground.
Opinion Sources
- Luxe Digital, 2022, ‘The Future of Online Luxury’, Mon 11th July
- Achim, Adina-Laura, 2020 ‘Here are four ways luxury brands keep loyal Chinese customers returning’, Campaign Asia, Sun 22 Nov
- Green, Eli, 2022, ‘RBA Boss Philip Lowe’s warning on interest rate rises as inflation worsens’, News.com.au, Wed 2nd Nov
- IAB, Australian E-Commerce Landscape report 2022
- Kelly Liu, James Yang, Melanie Sanders, and Ralph Wu, 2022, ‘China Singles Day 2022: Loyalty’s a better goal than RMB 1 trillion Sales’, Bain & Company, Tue 18 Oct
- WARC, 2022, ‘Singles Day 2022: Lots of products and muted expectations’, Tue 25th Oct
- Champagne, Imogen, 2022, ‘China’s top e-commerce influencer Li Jiaqi disappeared for three months, but the lipstick king is back’, Smart Company, Fri 23rd Sep.
- Qu, Tracy, 2022, ‘Alibaba, JD.om post healthy presales for Singles’ Day but consumer spending may be slowing’, South China Morning Post, Tue 1st Nov.