November 11, or “Double 11”, is now the world’s largest e-commerce shopping day, when merchants offer steep discounts to entice online shoppers. Since its inception in 2009, the day has achieved explosive growth year after year, and market leaders like Alibaba’s Tmall's have drawn the attention of other players, including, Dangdang, Gome and Suning, and international competitors like Amazon to partake in the frenzy. “Double 11” has grown to epitomize the success and growth of China’s e-commerce industry and is now closely watched around the globe.

As of midnight on November 11, 2015, total sales on domestic e-commerce platforms surpassed RMB 122.9 billion, or nearly USD 20 billion, with volume exceeding 680 million parcels. Sales on Tmall, an impressive RMB 91.2 billion, far exceeded its 2014 record of RMB 57.1 billion. Chinese consumers increasingly made purchases via smartphones, with mobile phone purchases accounting for nearly 70% of total sales. Tmall’s competitors also saw a large amount of purchases made on mobile phones – 74% for, 67% for Suning and 70% for Gome. Payment processing businesses like Alipay Wallet, another Alibaba product, processed approximately 73% of total sales. Tenpay’s WeChat and Mobile QQ payment systems processed approximately 19%. In comparison, Black Friday in the US saw sales of approximately USD 4.5 billion, with nearly one-third of shoppers purchasing on mobile platforms.

As these e-commerce giants invest in channels and processes to promote modern forms of consumption in China, Lunar’s portfolio companies are well positioned to leverage “Double 11” and similar events to drive revenue growth. 2015 represented Yeehoo’s third year promoting its products on “Double 11” and the business generated more than three times the amount sold in 2014. Yeehoo offline stores also reported record single day sales. These accomplishments were not by chance. As part of Yeehoo’s e-commerce strategy, the company analyzed consumption behavior and customer preferences through big data analytics, optimized product structures, improved merchandising designs, implemented various promotions, and enhanced store image and user experience. E-commerce sales for the business through October are growing at more than 80% year-on-year. Yeehoo also aligned and harmonized online and offline merchandizing which has had a significant impact on sales.

Version 1.0 of e-commerce in China where brands dumped outdated inventory is disappearing and being replaced by strategies focused on winning customers over with a consistent brand and sales message, providing consumers with high quality and convenient shopping experiences both online and offline. In August of this year, Alibaba invested RMB 28.3 billion to acquire 19.9% of Suning Commerce's shares, and the companies have since established a strategic development plan, where Suning's 1600 offline stores are utilized by Alibaba’s online initiatives, creating an online-to-offline model (O2O) in China. Other brands have creatively utilized O2O campaigns, such as Uniqlo attracting users to shop in-store using promotions on the company’s mobile app. Products are priced the same and users are able to seamlessly switch between Tmall and offline stores to purchase at their convenience.

Yonghong launched its online platform in 4Q2014 and has since leveraged big data, analysis and research on competitive products, including on taste, product weight, packaging, and positioning strategies to establish a clear online strategy. On “Double 11”, Bull Head (牛头), Yonghong’s most famous brand, achieved a single-day sales of RMB 1 million, and ranked third among all beef jerky brands. Bull Head (牛头) focused on managing inventory levels and customer satisfaction with on-time delivery, and furthered strengthened its reputation for quality and taste among buyers. During the promotional event, Bull Head (牛头) offered dedicated e-commerce products, different to those sold in stores, equipped with different packaging to accommodate online shoppers’ needs. Taking advantage of explosive e- commerce development, the brand will continue to marketing to young and energetic customers, and will strive to achieve greater sales in 2016.

We believe that China's e-commerce space will continue to evolve and provide compelling sales channels to our brands and brands in our pipeline, and that our management and processes are able to utilize early success case studies and best practices to ensure our brands and products are at the forefront of this phenomena.