The online shopping fiesta targets lower-tier cities and will take place on Alibaba-owned Taobao’s Juhuasuan platform which hosts flash sales. At the same time Alibaba has launched four operational tools including simpler interfaces for first-time or less-frequent buyers.
The potential is significant. In a 2018 report, Morgan Stanley wrote that it expects consumption in China’s lower-tier cities to triple to US$6.9 trillion by 2030. And figures from Quest Mobile indicate that the number of people wired to the mobile internet from China’s third- and fourth-tier cities has hit 618 million.
The 99 Bargain Festival is part of Alibaba’s plan against to counter the rapid growth of its e-commerce rival Pinduoduo and also creates an opportunity for brands to showcase themselves to small-town consumers and boost demand in the early stages of the marketing funnel.
The purchasing power of rural consumers has become a driving force for the growth of e-commerce in general, and for Alibaba’s own coffers. In its first fiscal quarter results, released last week, show that, among its active users of 674 million, more than 70% of new users came from less developed areas of China.
The market share of big brands usually drops off in small-format retail stores because selling the exact same things in both upper- and lower- tier cities does not work (for more on this topic, read WARC’s report: Mondelez targets provincial China amid economic downtown). So organisations need to rethink their product format, distribution strategy and staff structure to cater to the demands of lower-tier markets.
Sourced from Alibaba, Quest Mobile, Morgan Stanley; additional content by WARC staff