China Consumer

Great expectations

Shoppers set for another Singles’ Day sprint

Singles-Day-w

Tally ho! Alibaba staff cheer sales

It took Alibaba six minutes to reach Rmb1 billion in sales on Singles’ Day in 2013. The following year, it was three minutes. Last year only 72 seconds had elapsed, and by the end of the day Alibaba had reported sales transactions of over Rmb91.2 billion ($13.45 billion), up 60% on the year before.

This year Alibaba isn’t expected to report the gross merchandise value – or total value of transactions on its Taobao and Tmall platforms – for the annual shopping bonanza. The metric was also missing when it announced its second quarter results for the first time last week. Some speculate that the e-commerce firm has dropped the figure from its reporting because of an SEC investigation into its accounting practices for Singles’ Day sales. Others say the move may indicate that sales growth is slowing on its Tmall and Taobao marketplaces, although Alibaba executives have suggested that the sales measure is less appropriate as its business matures into new areas.

Yet with Singles’ Day taking place today, Alibaba is still focusing on making the annual shopping festival bigger than ever. This year the company is going high-tech, with a Pokemon Go-style game to encourage consumers to shop both on and offline and win prizes from merchants like Shanghai Disneyland and Starbucks, says Tech In Asia, a tech blog. Internet shoppers can also purchase virtual reality glasses (Taobao sells a cardboard version for Rmb15) to help them navigate shopping malls and make purchases. And jumping on the livestream bandwagon, there is Taobao Live: a relentless broadcast of infomercials.

The Hangzhou-based e-commerce firm will host an extravagant gala, featuring David Beckham and the former NBA superstar Kobe Bryant, along with a host of domestic celebrities. While watching the show, viewers can win prizes (by shaking their smartphones when prompted to do so) and snatch deals only available for those watching live.

Alibaba says the idea is to combine e-commerce with entertainment. Gimmicks aside, users should find shopping a lot easier. Alibaba says retailers on its platforms are much better able to customise their storefronts, product selections and promotions based on users’ past shopping and browsing habits. For instance, each consumer now sees personalised search results and recommendations when they open the Tmall app on their smartphones, says China Business Journal.

Or, as the company’s chief executive Daniel Zhang puts it, Alibaba is becoming a “consumer-to-business” company, with shoppers telling vendors what they want to buy instead of the other way round.

“We will become the future of new retail,” says Zhang. “Product design and manufacturing will move in the direction of truly being driven by big data.”

Competition is also more intense than ever, including Amazon, which has just launched a version of its Prime membership programme in China. The service, which costs Rmb388 a year, includes free, cross-border shipping from the Amazon Global Store, as well as free domestic shipping. The US online giant says it is targeting Chinese shoppers that like to purchase foreign goods. “In the past, the high shipping cost on Amazon has discouraged a lot of Chinese shoppers. The Prime programme will address those concerns, turning global shopping into a reality,” says Information Times.

Just like last year, Alibaba’s archrival JD.com has joined forces with social networking giant Tencent ahead of Singles’ Day. Whenever a shopper updates a social media account on QQ and WeChat – Tencent’s two hugely popular social network and mobile messaging applications – JD.com will use their information to target them with promotions.

What’s interesting about this year’s Singles’ Day is that retailers are rethinking their strategies. “In the past, it was about low prices and how to get even lower. But many brands and merchants now believe there is no way to sustain it. So we are no longer going to engage in a price war or gimmicks,” one merchant told 21CN Business Herald.

“Prices online have stabilised this year. Tmall no longer promotes everything at 50% off. JD.com, too, doesn’t play up low prices anymore. The whole industry is becoming more rational,” another industry observer noted.


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