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Article / 05 November 2014 at 9:59 GMT

Foreign companies smitten by China's Single’s Day

Business writer and editor
Australia
  • What began as retail therapy for the lovelorn is now online global shopping carnival
  • Appliances retailer Suning has partnered with a number of global brands
  • Costco debut on Tmall saw three tons of nuts, 500 kg of cranberries sold in 3 days 

By Adam Courtenay

If any proof is needed beyond Alibaba’s recent New York listing that China is at the forefront of global e-commerce, consumers need only look at the international response to China’s traditional 11.11 shopping day.

Created four years ago by the e-commerce giant, 11.11 or “Single's Day”, has become the world’s largest online shopping event – even if most of the world has yet to participate.

 
The idea was started as a kind of retail therapy for those without love partners. It has since moved from targeting the lovelorn to becoming an online global shopping carnival.
 
This year the event will be bringing some of the world’s biggest brands into the mix.

Companies without a China presence are realising they have to be in on this. Last year, two of Alibaba’s business-to-consumer marketplaces, Taobao and Tmall, rang up RMB 35 billion ($5.75 billion) in sales over the 24-hour period, an 83% increase over 2012.
 
With the added presence of global brands, analysts expect this year’s sales figure to hit RMB 50 billion – at the very least.

Having seen the extraordinary turnover of Alibaba and other e-commerce sites such as JD.com last year, many now view the event as a frictionless – albeit crowded – means to launch their wares onto the purview of Chinese consumers.

xxx
 Coming to a Single's Day server near you – Costco is getting in on the act. Photo: Thinkstock
 
China’s biggest appliance retailer, Suning, is using this day of mass retail hysteria to launch its US online shopping service. It has partnered with global brands in baby care, cosmetics and health products. Brands such as Earth’s Best (organic baby food), Burt’s Bees (skin and haircare), Maybelline and Revlon will be available at cut-rate prices.
 
Suning’s ploy is to help US companies to brand themselves in China, without the need for them to physically launch in the market.

Side-stepping normality

Single's Day is also about side-stepping shopping normality. Normality for the Chinese consumer is to have a purchasing agent buy products outside China, paying the agent to receive overseas goods, many of which are fraught with high shipping fees and beset by tracking problems.
 
Suning will be offering door-to-door delivery within China through its own Shunfeng Express courier service, with deliveries guaranteed in seven to 10 days.

Neil Flynn, head equity analyst at Shanghai-based Chineseinvestors.com, says Single’s Day is the smoothest path to entry for non-Chinese brands with either a weak or non-existent standing on the mainland. “Consumers still have the mindset that foreign is better, in terms of quality etc, so from an overseas merchant's point of view, it’s a great opportunity to get involved.”

The same goes for Alibaba, which has vowed to hit 100 billion RMB (over $16.3 billion) in just this one day of sales within the next few years. To achieve this, Alibaba can’t rely solely on Chinese consumers spending more each year on the same products, Flynn says.

“When it first came out, Single’s Day used to be about buying dirt cheap products, but nowadays it’s where people will buy their new phone or TV because they can get it cheaper on November 11,” says Flynn. “Consumers tend to care less about higher prices and more about the discount from the standard price, and overseas merchants who get into this spirit will benefit.”

The event will be run on an e-commerce scale not yet seen before. China’s largest e-payment provider, the Alibaba-owned Alipay, has evolved the ePass system to allow US merchants to sell and deliver products directly to Chinese consumers without the need to translate or to set up warehouses in China. 

ePass aims to ease the “friction” of international purchases by eliminating the need to use credit cards. Foreign retailers such as Gilt.com, Gap and H&M have already signed up.

Tmall International launched recently as a dedicated site for business entities outside China to sell products directly to Chinese online shoppers. More than 140 foreign vendors from UK, US, Australia and Japan are already using this platform, which offers a direct delivery service as well as 72-hour shipping and return facilities in mainland China.
 


 China's Single's Day is less about finding love and more about buying,
anytime, anywhere – even on the Beijing subway. Photo: Thinkstock
 
Three tons of nuts

As an example, Costco Wholesale debuted on Tmall International on October 12, selling three tons of Corcoran nuts and 500 kilograms of cranberries to Chinese consumers in its first three days. Already 100,000 mainland consumers have pre-ordered fruit and nut products for Single’s Day, via the Tmall portal.

Alibaba has even set up servers overseas as a means of improving the cross-border shopping experience and placed warehouses strategically outside China. It has also strengthened cooperation with overseas logistics firms and customs authorities.

China’s national postal service will collaborate with postal services in Brazil, Russia, Spain, Singapore and Australia, to allow consumers better package tracking facilities. Even the New Zealand Post Office has got into the game, adding a Chinese branch to its YouShop service allowing New Zealand shoppers to buy from offshore online stores that normally do not deliver to New Zealand or have high shipping charges.

Single’s Day is almost certainly going to be less a Chinese affair and more a global experience this year. And now multiple partners are making themselves available.

-- Edited by Gayle Bryant

Adam Courtenay
is a business writer and editor with TradingFloor.com. Join the conversation below to be a part of the social trading phenomenon.

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