Alibaba VP on China's post-pandemic retail rebound

While China has an online shopping event nearly every month, this year’s '6.18' mid-year shopping festival will be the biggest for several ecommerce merchants since the outbreak of COVID-19. The performance of the event can be used as a bellwether for the health of online retail in China. And early statistics are "very encouraging", Liu Bo, vice president of Alibaba Group and general manager of Tmall and Taobao's marketing and operations, tells Campaign Asia-Pacific.

Tmall has doubled the number of brands participating in its monthlong '6.18' campaign to over 100,000 merchants, and it achieved 50% higher gross merchandise value (GMV) in the first 10 hours following kickoff versus the same period last year. Specifically, growth has come from a doubling of sales in categories such as cosmetics, home appliances, computer notebooks and electric cars, as well as a 64% year-on-year growth in global brands participating (the total is 25,000 brands from 92 countries and regions).

More than 32 brands achieved GMV of RMB100 million (US$14.1 million) in the first day of '6.18', including Chinese brands Huawei, Midea, Gree and Xiaomi, as well as international ones L’Oréal, Estée Lauder, SK-II and Shiseido.

"We’re pleased that the trend of 6.18 is pointing firmly in the right direction. Online consumption has seen a post-pandemic revival since March, and the sales rebound that we have observed on Taobao and Tmall has been very encouraging," Liu said.

High-fashion luxury brands are among the new brands to embrace ecommerce, with double the number of luxury brands (nearly 180) taking part in '6.18' than participated in '11.11'. Several have opened flagship stores on the Tmall Luxury Pavillion for the first time in recent months, while Coach, MCM and Theory all recently launched outlets on Tmall Luxury Soho, a newly created platform targeting young Chinese luxury shoppers. Luxury is the sector that has been hit hardest by COVID-19 as the furthest away from 'essential' retail, but these brands are embracing ecommerce to "tap into China’s post-pandemic consumption rebound", Liu said.

The ballooning of participating brands in '6.18' has been months in the works. Alibaba has been proactively trying to convince traditionally offline brands to embrace ecommerce since lockdown measures were first enforced in China in January, where COVID-19 originated.

"The lockdown period was difficult for everyone in China—consumers, retailers and brands alike," Liu said. "To help brands and merchants stay afloat on our platforms, we rolled out a series of relief measures. We helped brands mitigate some of their pain, so that we hoped they would make it through and see activity resuming in the post-COVID period. We are going all-in to help brands to regain their momentum."

For example, in March Taobao launched its consumer-to-manufacturer (C2M) system to help traditional factories across China digitise their processes and directly connect customers and factories to enable more customised product manufacturing. 

"Matching their [smaller factories'] manufacturing capacities with market demands offers them a lifeline to keep their business floating," Liu said.

It has also developed its digital products and is working with brands to train staff on how to sell items via channels like live-streaming. For Taobao Live this year, around 10,000 physical retail stores are choosing to promote their products via livestreaming.

"They’re doing this because it was clear that they had to find a new and effective way to reach and engage customers," Liu said. "Those stores also worked with us to train around 50,000 of their staff to do the livestreaming sessions."

Taobao Special Offer Edition has also rolled out livestreaming functions during '6.18', enabling manufacturers to promote consumer-to-manufacturer (C2M) products. The GMV generated through Taobao Live hit RMB5.1 billion ($719 million) in the first day, while more than 1,000 brands, merchants and livestreamers achieved GMV worth RMB 10 million ($1.4 million).

Meanwhile Tmall recently launched a 3D shopping feature allowing customers to “see” how the furniture fits into their homes. The feature has so far adopted by around 100 furniture sellers, including Ikea, which opened its first third-party online store on Tmall in March.

Liu said the COVID-19 pandemic has "fundamentally altered consumer behavior and enterprise operations", making digital adoption and transformation a necessity. 

"The pandemic provided a wakeup call about the need to digitise and modernise manufacturing and retail," he said. "We’ve worked for several years with brands in various sectors, from hypermarkets, home furnishings, electronics, to convenience stores and more to digitise their operations, making them more efficient, merging their brick-and-mortar and online inventory channels, offering them access to modern logistics and analytics."

"We are well-positioned and prepared to help large and small brands across a wide spectrum of industries achieve the digital transformation they need to survive this difficult period and eventually prevail in the new normal," he added. 

The performance from two of China's biggest ecommerce sites points to the strength of China's online retail sector as it recovers from COVID-19. But it is not necessarily reflective of the retail sector for other countries around the world, which remain in the thick of the pandemic and are facing economic recessions as a result.