Christmas comes early in China. November 11 (11/11), known as “Singles Day,” is the world’s biggest 24-hour shopping event. Originally a cynical response to Valentine’s Day for bachelors, the day was transformed in 2009 by Alibaba executive (now CEO) Daniel Zhang into “Double 11.” The day has come to represent a unifying cultural event of unabashed retail therapy, coupons, lightning promotions, and gamified social media campaigns from retailers across the country.
The statistics are staggering, both for the sheer volume of sales transacted in just one day and for year-over-year increases that, so far, defy the gradual slowdown in China’s overall economic growth. 2019 was no exception, with e-commerce giant Alibaba reporting sales activity totaling 268.4 billion yuan (USD38.4 billion), surpassing last year’s haul of 213.5 billion yuan (USD30.5 billion) by nearly 26 percent. As a comparison, that’s more than 2.5 times the U.S. sales of last year’s Black Friday and Cyber Monday combined.
Still, Alibaba’s legendary co-founder Jack Ma declared the 2019 Singles Day a financial disappointment — a statement that speaks volumes about the unswerving ambition and relentless dynamism of China’s internet sector. I recently experienced this atmosphere first-hand at Alibaba’s headquarters in Hangzhou as part of a delegation from INSEAD’s China Initiative.
When we visited several Hangzhou tech companies a week before Singles Day we found that the stakes for the holiday were soaring. Online retail companies had to ensure the smooth execution of the biggest online shopping spree the world had ever seen. So much could go wrong: Servers could collapse under the unprecedented traffic; logistics suppliers could be overwhelmed by the flood of orders and could run out of inventory, causing unacceptable delays in delivery; marketing campaigns could fizzle out instead of going viral.
The ever-increasing prominence of Singles Day raises the stakes even further. Patient, price-conscious Chinese consumers habitually delay making big purchases as the big day nears, in anticipation of deep discounts. Companies that stumble on Singles Day stand to lose out on weeks, if not months, of pent-up buying activity. For some rising brands, Double 11 represents as much as 25 percent of sales for the entire year, according to informal Alibaba estimates. That pressure was palpable on our visit. An unspoken excitement thrummed every office; employees and executives alike were on high alert. Their hyper-attentive, briskly efficient attitudes seemed to convey that they allowed themselves no room for error or excuses.
From the viewpoint of Alibaba and other online retailers in China, then, what is the advantage of Singles Day? Why would they continue to fuel the growth of an event that causes severe disruption to the core business, while catering to consumers’ price sensitivity? Clearly, profit maximization cannot be the sole driving force behind the Double 11 phenomenon.
Our Hangzhou trip provided a surprising answer. Nearly every employee we spoke to described the challenges of Double 11 not as a necessary evil, but rather as the event’s primary value-add. They spoke of Singles Day as a stress test that forces the entire organization past its limitations, enabling it to accomplish and become what would be impossible otherwise. As Dr. Weiru Chen, Executive Director of Alibaba Industry Internet Research Center, explained, “Double 11 becomes an entire ecosystem’s exercise.” He went on to describe the 10 million-plus merchants and brands, tens of thousands of logistics companies, 3 million delivery people, and 500,000 trucks involved.
The impact of Double 11
Representatives from the Chinese companies we talked to mentioned several specific business areas where Double 11 annually spurs ambitious next-level change.
First, product innovation. According to Chris Dong, Global Chief Marketing Officer of Alibaba, as of 2018, 1 million new products are launched on Double 11. The pre-eminence of Singles Day creates the ideal platform for companies to launch new offerings.
Because companies must race new merchandise to market if they are to soak up the geyser of unleashed consumer demand, the intense stress strengthens the capacity of R&D departments and product managers to deliver high-quality results, quickly. The same is true of internal innovations; companies must improve and reinvent their processes across product innovation, IT, customer service and logistical capabilities to deal with the extreme load. Those benefits last long past the day itself.
For example, to prepare for Singles Day 2019, Alibaba refined AI algorithms that predicted customer orders, enabling warehouse workers to use their weeks of pre-Double 11 downtime to get likely packages ready to send. One Alibaba staffer we spoke with told us that more than 80 percent of 2018’s pre-loaded boxes successfully reflected actual purchases, and therefore could be shipped out on the same day without any alteration. “We’re aiming for more than 90 percent accuracy this year,” the staffer informed us. But perhaps more importantly, the company has benefited from deploying the algorithm throughout the year.
Another benefit is silo-busting. Silos are a universal problem for organizations; even though managers know it is important to work across teams and units, in the normal course of business they can get along without it. Double 11, however, requires all-hands-on-deck cooperation. In the months leading up to Double 11, for example, top executives from Tmall (an Alibaba e-commerce platform) and their counterparts at Cainiao (Alibaba’s in-house logistics network) meet weekly to align promotions with logistics capacity. This careful coordination has helped Cainiao take large steps toward Jack Ma’s stated long-term goal of 24-hour delivery to anywhere in China. Similarly Alibaba’s branding, e-payments, and supply chain planning teams temporarily relocate to corporate HQ from satellite offices 45 minutes away for tighter integration before Double 11. Hallways and elevator entranceways are commandeered as meeting spaces for cross-functional teams, with extra desks, chairs, and cubicles crammed in.
The cross-silo relationships and networks forged in the crucible of Double 11 are apt to deepen with time, if only for the sake of being prepared for next year’s Singles Day. In describing the “huge mobilization” of cross-business-unit communication that begins three months before Double 11, former Tmall president Jet Jing stressed that the informal ties created between employees from the various divisions continue to add value long after Double 11 (Jing is now secretary-general of the Alibaba CEO’s office).
Finally, nothing brings people together like a dose of adversity, and the demanding regimen of Double 11 fosters greater team cohesion that lasts through the year. What employees experience in the days leading up to Double 11 makes the controversial “9-9-6” workweek adopted by China’s tech companies (that’s 9 am-9 pm, Monday-Saturday) look like a holiday. Indispensable workers, such as engineers, will remain at the office overnight, sometimes for days at a stretch, catching naps while camped out with sleeping bags. Despite this grueling schedule, spirits generally seemed high as we walked the rows of cubicles. Impromptu dance parties and other company-provided amusements helped buoy morale among the troops. Motivational banners signed by employees pledged full commitment to “ONE heart together fighting the war of Double 11” (military metaphors were a common theme). The strong bonds between employees fostered by these efforts help companies hold onto sought-after talent in increasingly competitive tech hubs like Hangzhou.
Lessons from Double 11
Are there international lessons to be drawn from Singles Day? To be sure, Chinese businesses are not known for doing things by halves, and the Double 11 phenomenon reflects the speed and scale of growth that powered China’s economic miracle. Even so, non-Chinese firms can try mounting their own internal stress tests on a smaller scale at first, perhaps in the form of innovation sprints or strategically timed change initiatives. More broadly, the takeaway from Double 11 may be that managers needn’t always tailor their ambitions to the organization’s current capacities. Given sufficient inspiration and cautiously applied pressure, people can work together to achieve the “impossible.” And this points to a possible renewed purpose for management in the age of AI — using human resources to manufacture miracles.
Quy Huy is the Solvay Chaired Professor of Technological Innovation at INSEAD and Academic Director of the INSEAD China Initiative.
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