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      • Miaosha, the Chinese e-tail phenomenon

      • 11/01/2010
      • Joel Backaler

    Diandiaba (2010) ©

    Scope
    Beads of sweat drip down my forehead, over my left eyebrow, and into the corner of my eye. I would wipe my face with my hand if only I could pry it away from my mouse. Nothing breaks my fixed stare - I have been bidding for a week on a shiny new silver MacBook Pro on eBay and I am in the final seconds before bidding closes. Just when I think it’s mine – in that very last second a competing bid steals it away.

    While a bit exaggerated, you may have found yourself in similar bidding wars on online marketplaces like eBay. What if eBay announced an approximate timeframe in advance, say 7:35pm, when the price of a certain product would be at its lowest? Depending on the deal, thousands – or maybe millions – of online shoppers might go to the same online store for this special bargain, all waiting for the exact second the price drops so one lucky winner can miaosha a great deal.

    What is miaosha?
    Miaosha is a Chinese online consumer phenomenon quickly becoming widespread. Translated literally as “second kill,” the term originated from online multiplayer videogames like Blizzard’s World of Warcraft. In its original context, the term refers to a situation in which a player without any other option is killed or kills his opponent in an instantaneous attack. Use of the term has expanded to take on another meaning in China’s booming online consumer market estimated at 65.8 billion RMB in Q3 2009 (iResearch).

    Here’s how miaosha works: a company’s website or an online store on Taobao (Alibaba’s version of eBay) will announce that at a given time they will sell an expensive product at an exorbitantly low price far below market value. For example, they might sell a laptop computer or even a car for 1 Chinese renminbi. Millions of Chinese netizens will flock to the website at the designated time incessantly refreshing their screen view until the miaosha moment arrives. For one second the price plummets, and the observer whose index finger clicks the fastest will walk away with an incredible bargain.

    How does a company or online retailer benefit from a miaosha campaign?
    The main reason why a company is willing to sell a product significantly below market value - selling it at a loss - is marketing and creating brand awareness. There are thousands of online stores on Taobao. Nowadays many of China’s local brands are commercial options just as viable as foreign brands - competition is fierce and miaosha is a unique way to separate oneself from competitors and increase one’s visibility. Online marketplaces may also simultaneously give out other special offers on the site in the middle of a miaosha campaign. With so much traffic directed to the site, even if a netizen isn’t the miaosha winner, she may very well decide to buy another product on sale that catches her eye.

    Why does this trend appeal to the Chinese?
    China currently possesses the world’s largest Internet community – with 60% in the 18-35 year old age range. This group represents China’s first generation of online consumers.  The economic downturn has seen an increase in zhaishenghuo among this age group (a Chinese term describing a narrow or boring lifestyle). Zhaishenghuo means these netizens are spending even more time online playing video games, combing through BBS message boards, writing blogs and searching for online bargains instead of going out shopping in malls.

    Bargaining is seemingly intrinsic to mainland Chinese culture, and in addition to this many Chinese people love to kan renao. By announcing a time for the miaosha to take place, it’s an open invitation for a huge crowd to go online to the site and kan renao while they are unintentionally exposed to the brand and other products on the retailer’s website. For these reasons and others, miaosha is a perfect fit for young Chinese consumers.

    Online Consumerism in China
    China’s consumers are spending 20 billion USD on Alipay (Alibaba’s version of PayPal) each year. There is no shortage of shopping malls in China’s major cities; however, not all consumption is going to take place in the narrow shop-filled streets and newly built luxury shopping centers - online consumption is the trend to watch. This new generation of consumers has fully incorporated the Internet into their daily lives - shopping online is just one part of their online lifestyle. These consumers will continue to develop new and innovative ways to leverage the collective dynamics of communities to shop in ways we never thought possible. Miaosha is one such trend, but as we have also seen with the tuangou - team-buying - phenomenon, it’s certain there will be many others to come.

    Joel Backaler writes The China Observer, a China business blog focused on consumerism and technology. He is a former Fulbright Scholar, and has held positions in mainland China, Taiwan and in Singapore where he currently does business development for Frontier Strategy Group out of their Asia Pacific headquarters.

    Industry Digital Behaviour Retail Technology
    Location China
    Keywords eBay Bidding War Price Drop Competition
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