This week’s podcast is about Singles’ Day, which is coming up fast. Lots of stuff gets reported. But I am looking for 3 main things.
1: What is the fastest growing and most innovative frontier of ecommerce?
2: What are the big new bundles for consumers and the new products / services for merchants?
3: How did the company do in the stress test?
You can listen to this podcast here, which has the slides and graphics mentioned. Also available at iTunes and Google Podcasts.
Here is the link to the TechMoat Consulting.
Here is the link to the China Tech Tour.
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Related articles:
- AutoGPT and Other Tech I Am Super Excited About (Tech Strategy – Podcast 162)
- The Winners and Losers in ChatGPT (Tech Strategy – Daily Article)
- Why ChatGPT and Generative AI Are a Mortal Threat to Disney, Netflix and Most Hollywood Studios (Tech Strategy – Podcast 150)
From the Concept Library, concepts for this article are:
- Singles Day
From the Company Library, companies for this article are:
- Alibaba
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Welcome, welcome everybody. My name is Jeff Towson and this is the Tech Strategy Podcast from Tecmo Consulting. And the topic for today, three things I’m looking for on Singles Day. It’s, I mean, it’s about three to four weeks out now from Singles Day and things are ramping up right now. Like literally today JD started its promotions for Singles Day 2023. People are starting to talk about it. And Singles Day used to be a 24 hour period. It kicked off literally at midnight on Friday. I used to go to these events at the kickoffs and sort of go behind the scenes with Alibaba. We’d all have to get up and go at midnight. And then it goes for 24 hours and it would finish on Saturday night, depending on what the date works out. And that would be the closing Saturday. Well, that’s… You know, we’re past that now. Now it’s like six days, seven days. They keep changing the definition of what is singles day, but it ain’t a day anymore. There’s a lot of pre-sales, it goes on for days, it all gets registered in a certain period. Anyways, it’s not really a single day anymore. It’s just sort of a festival over a couple weeks. Anyways, that’s happening soon. And I thought I would talk about what I’m looking for, because I’ve been doing this for a long time. It’s a… Pretty awesome event, pretty important event. A lot of good strategy stuff happens on singles day. So I thought I’d talk about that. And that will be the topic for today. I don’t really have any housekeeping stuff. Let’s just do standard disclaimer. Nothing in this podcast or in my writing or website is investment advice. The numbers and information from me and any guests may be incorrect. The views and opinions expressed may no longer be relevant or accurate. Overall, investing is risky. This is not investment, legal or tax advice. Do your own research. And with that, let’s get into the topic. Now, let me first start with a couple current events. I’ve been doing this the last couple podcasts. Things I think are significant in terms of digital strategy and I’ll go through them quicker than previously. Number one, Shein and Fashion 21 have sort of joined forces. There’s been a cross investment between the owner of Fashion 21, which is Spark Group. and Xi’an both buying minority stakes in each other. That’s really interesting. You know, they’re both in fast fashion, effectively. I mean, Xi’an is considered super fast fashion. I really think it’s more of a story of super cheap fashion, but it’s also fast. You know, and fast fashion has been in sort of the same bucket. They both serve relatively young consumer bases. Fast Fashion obviously has physical retail. She is in 150 countries online. So it’s a very interesting joining of forces, which is basically new retail. And combining physical and online assets, experiences into one sort of unified structure can be a very powerful move depending on what sector you’re talking about. In groceries, it’s awesome. And the other on that short list that I think are the most exciting are fashion and apparel So yeah, that’s a really cool deal and it’s not good news for czar. It’s not good news for H&M I’m gonna be watching I want to visit one of these stores as soon as I can and see how much they are integrating the user experience online and in person Really interesting. I mean the West has really kind of been behind on the new retail thing China’s way out front. Brazil is pretty cool. Magalu is interesting. Anyways that’s number one. Number two, Xiaomi has sort of announced a new operating system, HyperOS. It’s not totally clear to me if this is just a new skin on top of Android, which is what they’ve always done. I mean all these smartphone makers out of China, Oppo, Vivo, Huawei up until you know the Entity List. They would basically take Android open source, and they’d put a new skin on top, and then they would plug into the Google Play Store to some degree. Now, two things have sort of happened in the last 24 months that are interesting with regard to that. Number one is hallway got banned from certain aspects of Western supply chain, one of which is access to the Google Play Store. So they had to build their own operating system, which is Harmony OS, which is a big, big deal because it may be the one… company that can break the global, really monopoly, I mean it’s a duopoly, it’s iOS and Android, but it’s 80, 90% Android. Can they break that? And it’s not about making the software, that’s pretty straightforward, and it’s not about putting it on phones. They’ve already done that. It’s about developing the ecosystem of developers so that hundreds and thousands of people are writing apps that run on your system. That’s the trick, it’s the developer ecosystem. Okay, so one of the questions was when Xiaomi launched this, are you going to, one, why aren’t you partnering up with Harmony OS, and two, are you gonna develop a full, developable ecosystem, or is this just another skin on top of Android? Unclear, it looks like it’s mostly just on top of Android. The other aspect that’s in there, so I’m watching, and we’ll know in the next week or two, I think. The other aspect I’m watching is… the idea that you’re gonna have an operating system that’s not just for smartphones, but it cuts across smart home, IoT, smart car, and it’s one integrated operating system, which is how Harmony OS was developed. It started out as an operating system for IoT. For little devices, you stick on cameras and sensors, and then they used that to create it for the smartphone, and now one of its strengths is it works across all devices. Well, Xiaomi is trying to do the same thing for sure because they’re going after cars, they have Xiaomi Home, they have Xiaomi smartphones, they have lots and lots of devices, so it’s gonna be a more integrated operating system regardless, that’s pretty interesting. Anyways, that’s kind of the two questions I’m keeping an eye on. Is this gonna be a full competitor to Android and how much are they gonna go for the whole ecosystem, IoT, smart home, smart car? which I think is, I think Xiaomi’s one of the leaders in that regard. Anyways, those are kind of the two current events, I guess, for this week. And that was about four minutes. That wasn’t too long this time. Okay, let me get into the topic here. I don’t have any real concepts for today. This is just singles day, which is awesome. I mean, it’s super fun. It’s a great festival. The money is ridiculous. Depending how you measure such things, it’s six times. what Cyber Monday is, you know, in the US. I mean, it has long since dwarfed anything in the West. It’s a massive surge of spending and activity and festivals and discounts and videos. And yeah, it’s huge. And you know, it started out of China as a sort of fake holiday that a younger Daniel Jang found when he was looking to create a festival. And they targeted this singles day thing. which is kind of a made up holiday, the anti-Valentine’s Day, and it wasn’t anything in China. You know, it started 1994-ish by some college students because they didn’t have Valentine’s Day dates, I guess. Wasn’t a big deal in China, but it’s turned into a big deal. Okay, so that’s rolling out, and let me tell you what I don’t care about first, and then I’ll tell you the three things I’m watching for. Everyone likes to talk about the GMV numbers. The numbers I believed, like I thought they were apples to apples comparison pretty much started, ended in 2019. They were usually going up by about 20% a year in terms of GMV. It was 25 billion GMV US dollars per year. Then it went to 30, then it went to 33, 34. Then they kind of changed the definition and it wasn’t 24 hours. And then it jumped to like 70 or 80 billion GMV. So one, Okay, fine, it’s a lot of money. You kind of got to look at the directional numbers and it looks like the growth has largely flatlined over the last year or two. It’s a couple percent here and there, but it ain’t a 20 to 30% growth we were seeing prior to say 2019. The other thing you have to think about is the one of the questions I always ask Alibaba is, you know, when it’s singles day, how much credit is being used? because they can ramp up the credit, buy things on a discount, buy now, pay later. It’s very easy for them to do that. And that’s gonna change the spending pattern. So how much of say 30 to $40 billion, how much of that was credit year over year? And they never ever answer that question. So you can move those numbers. And my standard joke is how much spending do you think there’ll be this year? And I… kind of say well it depends how much Alibaba wants there to be. Now they can kind of move the numbers a bit. Anyways that’s interesting but I don’t usually pay much attention to that. It’s gonna be big. I’d be surprised if the growth was 20 or 30 percent. I expect single digit growth but who knows. The other thing to think about is Singles Day is no longer just Alibaba. I mean it’s everybody. JD’s in there. Pinduoduo is definitely in there. You know. 70 plus percent of all Chinese consumers are gonna be participating on at least two to three platforms, if not four to five. So everybody’s in on this, so the numbers aren’t just like comparing Alibaba year to year like it used to be. So everybody’s in, it’s gonna be great. We kind of know what the user numbers are gonna be. The e-commerce numbers of China, usually they’re 500 to 600 million daily active users. So I think we’ll see sort of similar numbers. Taobao, it’ll be 550, 600. Pinduoduo will be about the same. JD will be 150 to 200 million, something like that. We’ll see. That’s what everyone talks about. I don’t really care about that stuff too much. Let me get to the so what. What I do care about. All right, now the number one thing I care about is where is sort of… the really active frontier of growth and innovation. Now what singles day tends to be? It tends to be when new products, new services roll out. It tends to be when new geographies come online like Southeast Asia, AliExpress into Spain, which is kind of happening right now. It’s when new types of products like local services versus new retail versus online. I tend to look for where is the most sort of exciting growth and innovation happening within e-commerce. Can we sort of pinpoint, you know, where the action is? And you know, for the last couple of years, let’s say we go back to 2018, 2019, most of the cool stuff I was paying attention to was combining entertainment with commerce. You know. Youku is obviously there too though. You know Taobao Live was really taking off. This idea that you know video and entertainment and commerce are merging together. And that was, you know they will often tell you, they’ll tell you what the theme of the festival is and it was like entertainment plus commerce. After that there was a lot more focus on new retail. integrating Singles Day into stores around China in particular. We don’t really see that outside of China yet. So let’s go to question number one I try to answer. What is the fastest advancing frontier of e-commerce? And can we really sort of identify that? China, Alibaba in particular, that is really the frontier of e-commerce globally. And these festivals are where they make their big moves. So it’s a really good way to get a sense of what’s the leading frontier of e-commerce globally, let alone China and mostly Asia. So that’s number one. Integration of video and commerce, Taobao Live’s a big deal. TikTok Shop is obviously a huge deal. What about new geographies of consumers? Is Spain gonna be a big deal this year? the southeast numbers gonna really move with Lazada? Retail? You know that’s kind of where I’m looking. Okay question number two here. what products and services for consumers are gonna be bundled, and what new services are gonna be rolled out for merchants. I’m sort of looking at the features and services they offer to the major user groups. And actually, I’m much more interested in the merchant side. When they build new features, I mean, there’s a lot of great advancement happening on the merchant side of these marketplaces. I actually think that’s a lot more interesting than the consumer side. You know, they’re offering them credit. They’re offering them new types of delivery. They’re offering them uni-marketing, which gives them data. They’re offering them product development services. They keep offering more and more on the merchant side. And China really is, and Alibaba really is the frontier of this. They tend to roll those things out prior to singles day because you have to make sure those are all working, because singles day is basically like a giant stress test. for the whole operation. Anything that’s gonna break is gonna break on Singles Day. And then they try to sort of use Singles Day as a way of launching those. So, you know, Singles Day people follow the discounts and the sales number, that’s fine. But for brands and merchants, you know, one of the biggest things they do, this is when they do new product launches. And they will use the product development services that Alibaba now offers, T-Mall, you know. development services, the Tmall Innovation Center, and then they will launch major new products on singles day. It’s a great way of launching new stuff and getting awareness. Or they’ll do initiatives on singles day that generate a ton of data for them on either current customer behavior or attracting new customers. And then that data will feed their strategy for the rest of the year. So when they offer like sort of an important new service for merchants. they tend to do the big rollout on singles day because most merchants and brands, yes, they’re gonna go for some sales, but they’re really looking for other aspects in terms of what do merchants and brands really wanna accomplish on singles day. It’s not just sales, it’s a lot about brand building, it’s a lot about data gathering, it’s a lot about new product launches, there’s a lot going on there beyond just sales. And so when we see major new services like buy now pay later, they make major launches on Singles Day. That’s, I really spend a lot of time digging into that. I think that’s really pretty important. Now that’s on the merchant side. On the consumer side, they don’t usually launch new services, but what they do launch is new bundles where they will take things, you know, new loyalty programs. VIP membership stuff, new bundled services, and they’ll start to put them together and offer them as packages. That’s pretty compelling, and it’s one of the great things Alibaba in particular can do. They can offer their sort of VIP membership stuff where you get discounts across everything they offer, services, entertainment. streaming services, e-commerce, delivery, fast delivery, free delivery. They can bundle all of that under membership programs, under loyalty programs, under packages. You know, most companies can’t do that. If you’ve read my sort of motes and marathons books, in softer advantages of digital companies, not major advantages like competitive advantages and modes, but softer advantages. One of the ones I look at a lot is bundling. Because, you know, if you take three products and you sell them together at one price, that’s okay in the drug store. You know, you walk to the drug store, there’s shampoo, then there’s conditioner. Oh, here’s a bundle of shampoo and conditioner for one price. It’s not a bad move, but when you move into digital stuff, you can bundle huge numbers of things. I mean, all Netflix is, is a bundle. It’s a very, very big digital bundle. So when you have an ecosystem like Alibaba as opposed to a pure player, you can start to bundle all types of products and services and your competitors for the most part can’t replicate what you’re doing. So anyways, that’s kind of number two what I’m looking for is new products and services that they’re using Singles Day to really roll out a major way. The merchant side is much more interesting. The merchants and brand services is really impressive. The consumer side, I’m mostly looking for bundling and packaging and things like that. Anyways, that’s number two. I think there’s gonna be a lot of credit stuff this year, but we’ll see. Okay, third and last thing I’m looking for, sort of last question I’m keeping an eye on is what’s the result of the stress test? Now, I love the idea of singles, Dave, in terms of operating performance. Like it is, like every business should do this. It’s, I mean, think about if you’re a manager and you’re building something like a warehouse, a smart warehouse, a distribution point, a new feature, a new credit offering for your merchants, a new credit offering for your consumers. Think of the pressure you have on you when you know that within 12 months, you’re gonna see such a surge in traffic and usage. that anything that has a problem is gonna break. I mean, it is just, like, it plays out in two ways, I think is just awesome. Like, number one, it is in fact a giant stress test. You know, when they put, you know, after the 2008 financial crisis, the US said, we need to give stress tests to our banks so that, you know, if there’s a crisis or liquidity crisis or whatever, we see what bank is gonna… collapse in which bank is gonna have a strong enough, you know, financial position to survive. So they said, we’re gonna stress test the banks. That’s a really good idea. Well, this is a giant stress test of a very large digital and physical operating system. So anything that can break will break. I mean, imagine you’re doing the warehousing. You know, they are moving billions of packages within a couple of days. the numbers go through the roof. Your servers get overloaded, your payment processing spikes. Anything that can break will break. I wish they would do this for like, I think we should do this for every business, especially banks. Every 12 months, all the numbers go up by a factor of 10, 15, 20 for 24 hours. And we see what busts. So one, it’s a giant stress test on a very, very complicated. Global operation with finance credit payment logistics Ecommerce software AI. I mean it’s that’s fantastic The second part which is more about operating performance You know if you go to the gym cool you go to the gym you work out Maybe you play soccer. Oh, we’ve got a match on Friday. We’ve got a match in two weeks three weeks I better train hard for my match Okay Having a match, let’s say a soccer match, in two to three weeks, a month, two months, you’re going to train harder than if you’re just going to the gym three days a week because it’s a good thing to do. Now imagine you’re boxing and you know within six months you’re going to step in the ring and the other person is going to try and hurt you and knock you out. Now you are going to train very differently when you know in six months you have to step into the ring. and maybe get really hurt. That’s singles day. If you’re a manager at Alibaba, it’s like every six months, you know you’re gonna have to step into the ring. So they are working like crazy. You do not wanna be the manager who builds something that breaks on singles day and gets written about and it’s a catastrophe. So there is, to me, that’s like getting into the ring And I really like this idea. Like I think all businesses, one, should have a stress test. And two, should have within every six to 12 months some match or competition that scares you to the bone. I mean, you will really work a lot harder and your organization will work a lot harder. Elon Musk does this a little bit with, you know, his big rocket launches. Everybody knows they’re gonna have to, you know, launch the rocket in six months. And… it’s gonna succeed or it’s gonna blow up. I really like those sort of, you know, putting those sort of events within, you know, sort of the life of a company. So that one of those is sitting on the horizon about every 12 months. That’s fantastic. So no, I love that, like the impact this has on performance. You don’t wanna be the manager at Alibaba who has the system that crashes on singles day. So I’m always kind of looking for what… how well the company is going to do on the stress test. And, you know, it actually works a little bit, not just for Alibaba, it actually kind of works for merchants and brands too. If you’re Coca-Cola or if you’re a Budweiser, you’re really on the line on singles day. You can go to the Alibaba headquarters in Hanjo on singles day and there is just, you know, floor after floor. of these rooms that are designated for brands. Like that’s the Coca-Cola team, that’s the Budweiser team. And you can see their head of e-commerce for all of China, like they’re sleeping in the room. You know, they really have sort of a gun to their head in terms of performance on singles day. So this whole stress test, I’ve got to get into the ring. It really applies to a lot of the merchants and brands too. If you’re the head of e-commerce for a major brand, like L’Oreal, Yeah, you’re really thinking about singles day six months in advance. So I like that effect. I like the, they call it the Olympics of brands. I like how that plays out. I’m really trying to figure out how to dial that sort of phenomenon into other businesses because it really works really well. Anyways, that’s kind of number three. We haven’t seen too many things break on singles day in terms of stress testing. Small stuff does, but we haven’t seen any major issues. And I think… when you have this year after year, you sort of, it gets built into the culture. It’s not like a one-off. Everyone’s used to this. It’s like being an Olympic athlete and you know you’re always going to the Olympics in a couple years. So that’s kind of the third one. That’s what I’m looking for at this event. And then there’s the regular stuff, but strategically, those are what I kind of think are more important. Anyways, if you have any other ideas for this in terms of strategy, send me a note. I’d appreciate it. Those of you who are subscribers, I sent you a couple articles on this weekend, just sort of what I’m looking for. I’m not going this year. I’ve been quite a few times sort of backstage as singles day. I don’t think I’m going. I’m not planning to anyways, but who knows. It’s pretty fun, but yeah, you’ve seen it enough times. It’s like, all right, we’ll see. Anyways, that is it for me for content today, shorter today. As for me, I’m not in Vietnam, unfortunately. I had a visa issue, which was really pretty frustrating, where I was all packed up, I’m ready to go, I go to the airport, I’m checking in for my flight, and there was a typo in my Vietnam visa, like on my birthday one of the numbers was wrong. And yeah, they’re like, yeah, you can’t board, your visa doesn’t match your passport. I’m like, well, you know it’s the same person. You know it’s obviously one number, but the other two numbers are right. They’re like, no, we can’t let you board. You have to go to the consulate in Vietnam and get it fixed. Well, getting an e-visa for Vietnam, usually it’s four to five days, something like that. So anyways, I got to, there should be a word for this. Like when you pack up and you’re doing an international trip and everything’s set, your apartment’s closed down, you’ve got your hotel booked, all that. You go to the airport, you’re mentally on the trip, and then you have to turn around and come back home. Like, it’s not just rejection and cancellation, it’s like another level of rejection and cancellation. You come all the way back, you reopen your, you know, I reopen the condo, I turn off tail arms. You know, I unpack everything I just packed three hours prior. There’s something about coming home, you know, going to the airport, and then turning around and coming back. There should be a word for that, but I’m not quite sure what it is. So anyways, I was pretty disappointing. I was going to be part of a pretty awesome group that’s in Vietnam and hear from some companies. I was really looking forward to it, so that’s kind of disappointing. Nothing really else to recommend. No new shows. Actually, I’ve been watching a lot of BattleBots, which is really great. I like the strategy aspect. I like to think of it. kind of weird. I’m only interested in one thing in life which is like strategy and competition. Like I like to go on safaris and think about like why tigers beat lions but lions beat cheetahs. Battlebots is kind of the same thing. Like why do vertical spinners like for those of you who are familiar like vertical spinners like bite force usually beat horizontal spinners. What happens when you have two flippers go head-to-head? I’m watching the season where it’s Hydro versus Bronco. So I’m getting into the strategy aspects. I don’t really want to build bots, but I think I would love to be a coach and design how you fight against various robots. So yeah, it’s my same one interest in life of strategy and such. Anyways, that is it for me for today. A shorter one this week. I hope that is helpful. Next topics we’re gonna get into, I’m gonna talk a lot more about intelligent transformation as opposed to digital transformation. I think that’s like one of the most important things happening, like it’s this massive idea of instead of taking a business and making it digital, digital transformation, digital strategy, digital disruption, we’re talking about intelligent disruption, intelligent transformation, intelligence strategy. where you’re building really fairly impressive intelligence capabilities into businesses. That’s kind of a subject I’m working a lot on right now and I’m going to start talking about that some more. I’ve sent out some articles about that in the last couple weeks. Anyways, that is it for me. I hope everyone is doing well and I’ll talk to you next week. Bye bye.
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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.
I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.
My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.
Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.
