Foreign companies smitten by China's Single’s Day
- 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.
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.
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.
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.
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.
anytime, anywhere – even on the Beijing subway. Photo: Thinkstock
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.