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Will China’s Singles’ Day expand internationally?

By: Georges Berzgal

Singles' Day in China 

Singles’ Day is this Saturday. This article takes a look at the Chinese online retail discounting event, and considers how it might spread internationally.

 

China is a global ecommerce powerhouse, with a population of 1.3 billion and online retail sales estimated at around $899 billion. By 2020 this figure is expected to rise to $1.7 trillion, eclipsing the UK, US, Japanese and German markets combined.

Evidence of this can be seen in the high numbers generated by just one shopping day: Singles’ Day. Also known as double 11, as it falls on November 11th, Singles’ Day is a kind of ‘anti-Valentine’s Day’ and has become an online shopping phenomenon. The day plays a significant part in China’s online retail calendar.

On Singles’ Day 2016, shoppers spent $14.3 billion in 24 hours. By comparison, in the US $11bn was spent online in the entire five days from Thanksgiving to Cyber Monday, including another one-day shopping phenomenon, Black Friday.  Alibaba has now become synonymous with Singles’ Day since it launched the day as a means to fill the sales gap leading up to the Lunar year.

However, it has since expanded, and shoppers are using the opportunity to buy from a variety of global brands as well as Alibaba, both through its Tmall marketplace and directly from retailers, whilst Alibaba competitors such as JD.com are gaining traction with full-blown market assaults on Singles’ Day.

Image source: Tmall

Opportunities for retailers

Black Friday has quickly shifted from a chaotic and frenzied in-store, physical phenomenon to a more sedate online shopping sale. This shift to online has extended its appeal, and it has now become a crucial date for retailers and shoppers in the US and beyond as global brands cash in on the day. But will Singles’ Day do the same?

There are two opportunities to consider here: firstly, the opportunity for online retailers located outside China to attract Chinese buyers on Singles’ Day; and secondly, the appeal of Singles’ Day to shoppers located outside China.

Brands attracting Chinese buyers on Singles’ Day

Chinese shoppers’ love affair with British goods is widely documented, and last year’s Singles’ Day saw some British brands reportedly generating sales in excess of one item every second. Top Shop sales surged 900%, and Tangle Teezer – a brand notorious for being rejected from the TV series for entrepreneurs seeking funding, Dragon’s Den – sold £700,000 worth of products in the first ten minutes. Holland and Barrett, the health food company, also saw a boost in sales, and the Hut Group, ASOS and Waitrose saw growth in sales on the day through their Tmall stores.  

It isn’t just British goods that Chinese shoppers are attracted to, of course. We surveyed 1,200 retailers from eight countries, and 12,000 shoppers from 12 global markets for its Global Ecommerce Shopping Study 2017. The study found that 78% of Chinese shoppers polled are buying from the US; 72% from the UK, Australia, Germany and France; and 70% from Japan.

The research also found that 60% of shoppers from China who have bought overseas do so for quality (up from 51% last year), followed by 49% (up from 37%) looking for product authenticity and 46% for brand names (up from 36%).

Removing barriers to purchase is crucial in attracting buyers from overseas. Global delivery, for example, is more than finding an international carrier. Retailers in the study cited fast and cost-efficient delivery as a key concern in serving global markets. Shoppers also saw shipping cost and delivery times as the largest barriers to shopping cross-border. Carefully and continuously managing relationships with both international carriers and last mile delivery providers is critical.

Connected shoppers

Brands must not only go to where their buyers are located for successful overseas commerce on Singles’ Day, but they need to engage with them on their platforms of choice, too. The proliferation of mobile devices has a huge influence on the burgeoning online retail market in China. By 2019, it is forecast that mobile users in China will spend almost $1.5 trillion on mobile commerce. On Singles’ Day 2016 Alibaba recorded $14.6 billion in mobile sales – 82% of total sales.

Businesses looking to capitalise on the opportunities presented by Singles’ Day must deliver a seamless multichannel experience. They should also secure a presence on platforms such as WeChat and Mobile QQ. A multi-functional social media platform, Chinese shoppers use WeChat for a host of different activities, from connecting with family, to playing games, to buying cinema tickets and sharing online experiences with fellow shoppers. Mobile QQ is similar, but tends to veer towards younger users.

The role of social platforms on Singles’ Day is significant. JD.com, one of Alibaba’s competitors, reported over 30 million orders on Singles’ Day according to Internet Retailer, with 52% of new customers visiting its website from WeChat and MobileQQ.

The power of the marketplace

Similarly, overseas brands should not underestimate the power of the marketplace in reaching their buyers on Singles’ Day and beyond. Shoppers’ use of marketplaces continues to rise: research from Pitney Bowes Global Ecommerce Study 2017 reveals that 67% of online shoppers choose marketplaces like Tmall, Amazon, eBay, Flipkart, Rakuten and JD.com to search for products. This compares with search engines (46%), retail websites (40%), social media (24%), and mobile apps (23%).

When it comes to actually buying products through marketplaces, online shoppers report that 62% of their cross-border purchases and 59% of their domestic purchases take place on online marketplaces, versus retailer websites. These trends have increased year-over-year and are most prevalent in China, Germany, India and Japan. Product assortment, better deals and easy checkout are the top three reasons shoppers choose online marketplaces.

Image source: LinkedIn

Will Singles’ Day take off outside China?

We know that shoppers are taking advantage of the borderless world of online retail and shopping outside their home country. The Pitney Bowes research found that 70% of online shoppers surveyed now buy from overseas companies.  Asia Pacific has seen the biggest year-on-year increase since last year’s study, led by India (up 18% since last year), China (up 12%) and South Korea (up 8%).

For retailers already offering cross-border purchases, the rewards are high: the research cited above found that the average order value of a cross-border purchase is 17% higher than a domestic average order value.

Figures show that the four-day sales between Thanksgiving and the following Monday, also known as Cyber Weekend, is developing traction outside the US: UK shoppers spent around £5.76bn in 2016 on Black Friday, and £1.9bn on Cyber Monday, for example. 

We also know that retailers are setting up their virtual shops closer to home: when retailers implement cross-border strategies, they tend to start where the transition is easiest – neighbouring countries, or what Pitney Bowes calls ‘near-border’, with similar regulatory environments, where people often speak the same language. But, more often than not, the greatest opportunity for cross-border growth and success is further from home.

Our analysis has found that the prioritisation of near-border markets has come at the expense of underserving shoppers in countries more willing to shop cross-border, and less price-sensitive to “near-border” markets. Entering new markets with different cultures, languages and laws is complex, but the rewards can far outweigh the investment and challenges.

Localisation is crucial – and this doesn’t just mean offering prices in local currencies or local languages on a website. Each market has its own behaviours, its preferred marketing channels, its own payment methods and its unique cultural differences. For example, British retailers are sensitive to the fact that November 11th is Remembrance Day. It isn’t a national holiday, but is a date etched in British society remembering those affected by war.

Shoppers may see efforts to rebrand this as Singles’ Day as crass or insensitive.  For US retailers, 11th November is close to Thanksgiving, and to other key November dates in their commercial calendar -   Black Friday and Cyber Monday. Shifting their focus from this onto a date a few weeks earlier might not be viable. US shoppers are likely to hold off to take advantage of the home-grown bargains they know are coming. They also have more time to shop later in the month during the long public holiday.

Conclusion

Jack Ma has high expectations for his business. The FT reports that by 2026 Alibaba’s founder expects one in four people in the world to buy through his online retail platforms which include Tmall and Taobao. If his expectations become reality, we may well see Singles’ Day squeezing itself into online retail calendars across the world – but only if retailers have the people, technology and processes to deliver a truly personalised and localised customer experience.

 

By: Georges Berzgal, Vice President EMEA, Global Ecommerce, Pitney Bowes

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