Every November, supply chain teams in China brace for the Olympics of end-to-end supply chain management: Singles Day.
Singles Day Shopping Carnival, as it was originally called, is a major online promotional day held on November 11 in China. Its origin stems from online promotional activities initiated by Alibaba in 2009, and in the 12 years since, Singles Day has evolved into the biggest annual event of China’s e-commerce industry. It has even expanded beyond China to become a regional shopping festival known affectionately as “Double Eleven.” Featuring steep discounts that run for just 24 hours, it’s like the U.S. Black Friday and Cyber Monday shopping sales combined … but bigger. Online sales surge as much as 100 times greater than normal, with Singles Day drawing millions of participants each year, producing revenue in the billions.
In the consumer goods arena, Singles Day has become the year’s must-win campaign. It is the go-to opportunity for debuting new products and initiating strategies for the rest of the year. Companies across the country spend months planning for this annual event.
At Johnson & Johnson (J&J), Singles Day is an especially important event for our Consumer Health Supply Chain. With all kinds of products being promoted during “Double Eleven” (even real estate properties have online discounts), cosmetic products have become one of the fastest growing categories. Indeed, consumer products from J&J account for more than 90% of the company’s Singles Day sales. Our sales volumes from Singles Day continue to grow year over year, especially since the pandemic has increased demand for self-care and health products, including skin care and personal hygiene.
With stakes this high, our teams start planning for this blockbuster event at least four months in advance. This planning encompasses outlining not just how products will be sold but also how they will get from the warehouses to the customers’ mailboxes. To make sure that J&J is prepared to capitalize on the surge in Singles Day sales, the Consumer Health Supply Chain ensures that a seamless supply chain structure is in place. The planning process also includes laying a strong digital foundation that supports the end-to-end agility and effectiveness of the team.
Setting the ground rules
Our Consumer Health Supply Chain at Johnson & Johnson begins intensive preparations for Singles Day as early as July. This is an event that pushes every element of e-commerce to new heights—from customer experience to sourcing, and from packaging to delivery—and that means hundreds of supply chain employees across the region are involved in the preparations for this event.
Preparations typically involve:
In addition, every year companies must adapt to new “game rules” designed by the e-commerce platforms, like Alibaba. Each e-commerce platform creates its own game rules to boost its competitiveness and incentivize both sellers and customers to participate in the shopping festival. While the game rules change every year, some continue after the year they were created.
In 2020, one of the game rules created two sales events spaced nine days apart: one from November 1 to November 3 and one from November 11 to November 13. Another new rule specified that all parcels were required to leave the distribution centers within 48 hours from the time orders were received, instead of the seven-day timeframe that had occurred during prior years. The “double sales surge period” benefited the sellers, while the 48-hour rule benefited customers by guaranteeing faster deliveries.
The game rules for Singles Day in 2021 focused on the “presale period” and livestreaming events. While Singles Day began as a 24-hour flash sales event, e-commerce platforms have been adding a presale period for the past few years before the official sales begin. The presale period, which now begins in October, allows consumers to have more time to view products before they place orders with a small down payment. After the presale period, consumers pay the rest of the amount, and companies carry out their deliveries. Many companies also stepped up their livestreaming events this year during the presale period. During these events, social media influencers or celebrities hosted live video broadcasts during which they reviewed products that would be sold during Singles Day. The presale period and livestreaming events posed a challenge both for the business and the supply chain. Because their effect on sales is unpredictable and because they begin a few weeks in advance of the actual Singles Day sales event, they introduce a high amount of volatility to the supply chain. We cannot rely on building more inventory beforehand, instead we need true end-to-end agility. There needs to be close coordination between the commercial team and the supply chain team to manage demand so that we avoid having to deal with excess inventory following the event. This close coordination between the teams is also necessary to ensure that orders are shipped accurately within the agreed-upon timeframe.
Preparing for success
The success of Singles Day depends on robust planning and logistics processes supported by close collaboration between our supply chain team, our business/commerce team, our e-commerce distributors, and the e-commerce platforms.
Our supply chain and commercial teams begin by working collaboratively to create alignment around our sales strategies. Our sales strategies involve highlighting certain products in a unique way that will only be available on Singles Day. This encourages consumers to purchase the special promotion while not affecting their normal buying behavior. For example, we wouldn’t want to discount a typical household product like shampoo in a way that would cause our customers to pause their normal buying behaviors to “stock up” on Singles Day. Instead, we think of this day as an opportunity to unveil new products and offerings as opposed to deeply discounting existing ones. To avoid dealing with overselling or underselling, we proactively communicate our sales strategy with our e-commerce distributors and platforms as well as sharing any information around product combinations and COVID-19 protocols.
Next, we forecast order volumes based on the business plan, information collected from the e-commerce platforms, and historical data. Once we have an idea of the forecasted order volume, we start to build warehouse capacity at multiple sites, not only at J&J distribution centers but also at e-commerce distributors. This process includes not only ensuring that we have enough storage space but also making sure that we have the equipment capacity and labor needed to fulfill the expected surge in orders. During the planning process, we may discover that we need to redesign spaces for storage, packing, and parcel production. We may also discover that we need to set up an information technology system that can dynamically allocate customer orders across distribution centers according to the inventory level and warehouse capacity constraints.
We also collaborate with our internal and external partners to work through scenarios to mitigate risks. By proactively working to sense future threats and unpredictable disruptors, we are able to build a more resilient supply chain that can absorb stress and recover quickly. For example, in 2021, we were able to leverage J&J’s network of sites within Asia Pacific for shared and back-up inventory. This tactic helped us mitigate any supply and transportation risks from delivering products coming from other regions as well as avoid greater air-freight costs. As the sales event starts to get close, we continuously review our supply readiness and finalize the logistics plan. On Singles Day, we are one team, and together, we continuously monitor the sales performance and react in an agile manner to the dynamic situation.
In many ways, good data provides the basis for our planning and collaboration efforts around Singles Day. Accurate and timely data allows us to communicate effectively across teams, incorporate learnings from previous years into the current year’s strategy, and make better and faster decisions.
To ensure that we have sound data, we need to first have solid digital tools and processes in place to collect and analyze that data. This need is one of the many reasons why the Consumer Health Supply Chain at Johnson & Johnson is in the midst of a significant, purposeful digital transformation effort. We are in the process of integrating data and digital tools to bring a better experience to our customers and improve our own processes. The investments we are making in digital supply chain solutions are enabling our teams to get increasingly better at identifying trends in advance and at being better prepared to adapt to sales patterns in real time.
There are several ways that the Consumer Health Supply Chain is leveraging our digital investments to help with planning for and responding to Singles Day sales:
Reviewing this data allows us to create customer profiles, which in turn helps us predict demand and to work strategically with the commercial team to promote specific products. The ability to obtain immediate feedback from customers also enables us to identify trends, such as the increase in demand for self-care products driven by the COVID-19 pandemic.
Additionally, demand sensing and predictive analytics solutions have allowed us to create consumer order projections in daily and hourly increments. As a result, we can deploy inventory efficiently and precisely across distribution networks and time periods. We were able to achieve this level of insight by leveraging data from all aspects of our supply chain: inventory levels, plant capacity, demographics, weather, customer sentiment, promotions, usage, and shipping times.
We also expanded our direct-to-customer (DTC) model and empowered it with digital capabilities to significantly reduce our replenishment lead-time to e-commerce distributors from two days to one hour. This model helped to mitigate the risk of our distributors running out of inventory due to increased demand from live-streamed promotional events.
Reaping the rewards
Singles Day can be a year-making sales day, enabling companies to gain market share and build greater brand awareness. To succeed at Singles Day, companies need to have on-shelf availability, product offerings that appeal to their audience, and best-in-class consumer service. Good data analytics and thoughtful planning are the foundation for achieving these goals.
Johnson & Johnson's Consumer Health Supply Chain has made meaningful gains when it comes to Singles Day. These gains include reduced lead-time from order to delivery, faster last-mile delivery, and cost reductions. Thanks to our ability to leverage data to drive planning and efficiency, we have improved our service level, shipping out almost all parcels to customers within 48 hours of order. At the same time, we achieved a record high level of on-shelf availability, which underscores our commitment to serve our customers and consumers anywhere, both offline and online.
Looking ahead to Singles Day 2022, we expect to see continued growth in sales. As the culture around Singles Day evolves, our company strategies must change and grow alongside it. By continuing to utilize data and developing digital capabilities, we will be able to provide customers with opportunities for customization and other appealing offers to excite them about the event. For leaders across the consumer health industry and beyond, Singles Day is a wonderful opportunity to connect with consumers, and it also allows us to showcase the strength and significance of our supply chain and the value of good data and analytics.