Promotions drive sales on Singles' Day
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E-mail China Daily, November 13, 2012
The sales revenue a few Chinese online retailers made this Nov 11 - a date set aside in China in honor of single people - was more than double the entire amount made in the US market last year on so-called Cyber Monday, or the day following Thanksgiving weekend.
Analysts said online retailers offered various promotions for Singles' Day, which fell on Sunday this year, helping to stimulate domestic consumption.
The biggest online shopping sites in China, Taobao.com and Tmall.com, both of which are owned by the e-commerce giant Alibaba Group Holding Ltd, had 19.1 billion yuan ($3.06 billion) in total transactions on Sunday. That company's lead was followed by other Chinese e-commerce websites, many of which had also offered discounts to give their sales a boost that day but hadn't released revenue figures for the day by press time.
Alibaba's sales alone were more than double the $1.25 billion that retailers made through online sales in the US market on Cyber Monday last year, according to the research company comScore.
One contributor to Sunday's spending binge, which generated about as much revenue as three weeks' worth of retail sales in Hong Kong, was an explosion in shopping among those who are usually reluctant to buy relatively higher-priced goods, said Ding Ningning, a researcher at the State Council's Development Research Center.
"It's not that consumers can't afford to buy things," he said. "It's that prices are sometimes too high, (which affects people's willingness to buy)."
Singles' Day was started by university students and later taken up by e-commerce companies as an opportune time to offer sales promotions.
Ding said the promotions offered on that day often reduce the prices of goods by half. Those help encourage people, especially young Internet users who are often less inclined to plump for relatively expensive items, to make purchases online.
In an interview with China Central Television, Jack Ma, chairman and chief executive officer of Alibaba, said the online shopping figures are "a signal that China's economy is making a transition".
China has been trying to stimulate domestic consumption to boost its growth at a time that the weak global economy continues to put a damper on exports from China. The country's economy grew at a rate of 7.4 percent in the third quarter, its lowest quarterly rate in more than three years.
Xu Wei, a researcher from the China Center for International Economic Exchanges, agreed that online shopping is becoming an ever-more popular way to increase the spending power of Chinese consumers.
Even so, she said the Singles' Day promotions might have merely caused certain products, such as cars, to be sold sooner than they would have otherwise and could ultimately lead to declines in future demand. An automobile shop on Tmall sold more than 300 cars on Sunday, said Alibaba.
During the Nov 11 promotion, 217 online vendors that were then trading on Tmall.com - nearly quadruple the number for last year - had more than 10 million yuan in total sales, said Alibaba.
The clothes brand Jack & Jones topped the list, having 119 million yuan worth of sales, about three times the amount it had during the promotion last year.
E-Commerce China Dangdang Inc, a US-listed online retailer, had 100 million yuan in sales on Monday. And Tencent Holdings Ltd's 51buy.com said its sales exceeded 120 million yuan on Sunday, more than 10 times the amount on the same date a year before.
Most of the other e-commerce companies that provided discounts on Nov 11, including Jingdong Mall and Amazon China, hadn't disclosed their sales figures by press time.
E-commerce, which has become increasingly popular in recent years, is expected to see its value increase to 18 trillion yuan by 2015, four times the amount for 2010.
By that time, it is predicted to be the source of 9 percent of all retail sales in China, according to the 12th Five-Year Plan (2011-15).
Online shopping generated only 4.32 percent of retail sales last year, up from 1.16 percent in 2008.
While the promotion on Sunday enticed 213 million Internet users to shop online, according to Alibaba, shipping became a cause of concern for many people.
Couriers, though, said the number of packages being ordered was still manageable.
SF Express (Group) Co plans to work with Tmall on a shipping monitoring system to cope with any emergencies that might arise, said Zhang Jianhua, a public relations manager at the company's Shanghai operation.
"We set up a group to work with Tmall on online shipping management," he said. "Once we receive a warning from them, we manage to respond with contingency plans.
"We have also expanded our fleet in cities across East China, where demand is usually higher than in the rest of the country," Zhang said.
The company has also introduced a slow-delivery service that is meant for shoppers who don't need to have their purchases delivered according to a strict schedule. The arrangement merely ensures their orders will arrive in no more than four days.
Chen Mingqiang, a district manager at YTO Express Co Ltd in Shanghai, said he has yet to see a big increase in the number of packages being ordered.
"The volume has doubled from what it is usually, increasing to about 8,000 pieces so far," Chen said. "But it's just a meager increase from the same time last year."
Chen expected the peak for shippers to come on Tuesday, when goods dispatched from Guangdong province and Beijing will still be coming in.
Preparations aside, two factors have helped to ensure the packages have not been caught in a bottleneck, Chen said. One is that the Singles' Day promotions fell on a Sunday this year, meaning the parcels could be "on the move" on Monday.
"Last year, Nov 11 came on a Friday," he said. "So packages delivered to office buildings kept piling up in our warehouses during the weekend, and could only be sent over the next few working days."
And as more delivery companies try to cash in on the shopping boom, the competition in that industry has become much more intense, Chen said.
"The delivery market last year was largely dominated by three leading firms in Shanghai," he said. "Today, the landscape is more fragmented, as more and more small and medium-sized firms swim with the tide."
Xu Yong, principal analyst of the China Express and Logistics Consulting website, said the industry in China is basically controlled by 10 companies.
Xu said the peak in deliveries will start on Monday night and last through Tuesday.
"The maximum number of packages that can be received by the industry each day is between 25 million and 30 million," he said. "So it should take delivery firms about a week to handle all of the packages sent as a result of the Nov 11 promotion."
Dong Dongdong, a lawyer in Shanghai, snapped up six iPhone cases for his wife on Sunday. To his surprise, the orders arrived by lunchtime the following day.
"It was so much faster than I had expected," he said. "I am going to give the seller a five-star rating, both for the quality of the goods as well as the shipping."
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