Competition heats up ahead of China’s Singles’ Day online shopping extravaganza
November 9, 2015 09:38 AM
A booming e-commerce market in China helped Alibaba Group Holding Ltd. transform Singles’ Day, an informal holiday among Chinese students, into the world’s largest online shopping carnival, taking place every year on Nov. 11.
On Singles’ Day last year, Chinese consumers purchased $9.3 billion worth of goods though Alibaba’s platform, mainly its two web marketplaces that dominate Chinese online shopping, Taobao and Tmall. Items purchased included 1.2 million home appliances, 3 million lighting products and 50,000 new cars, according to Alibaba. Other Chinese online retailers also now offer big sales on Nov. 11.
This Singles’ Day, on Wednesday, is expected to generate even more online transactions.
While Alibaba hasn’t released projections, China Post, the country’s postal service and one of its largest shipping companies, estimates Singles’ Day orders will require delivery of 760 million packages, up 40% from 540 million last year.
Alibaba says this year it is pushing Singles’ Day sales in two new directions. First, the company is recruiting more international brands.
Tmall Global, the Alibaba site that sells imported products, says presales in the last three weeks of October for international sellers like U.S. retail chain Costco Wholesale Corp.,No. 11 in the Internet Retailer 2015 Top 500 Guide, surpassed their total sales during last year’s Singles’ Day and may top 100 million yuan ($16.6 million) once Singles’ Day is included.
Tmall Global also reports there are about 10 companies, including Germany retailer Metro AG, Costco and Korean e-retailer Gmarket, whose sales have exceeded 10 million yuan during the presales in the last three weeks in October.
Alibaba’s second focus is working with 180,000 stores on cross-channel promotions. Consumers can use smartphones to scan QR codes in these stores to get coupons for online shopping during Singles’ Day.
Alibaba’s competitors are also gearing up for Singles’ Day.
As the nearest competitors of Alibaba in China, JD.com Inc. this week filed a complaint with the Chinese government, alleging Alibaba told some merchants it would not promote their sales on Singles’ Day if they cooperated with other e-commerce platforms.
In a statement, a Tmall’s spokesman says it likes PR campaign. She said JD’s complaint is like “a chicken complains a duck because it thinks the duck monopolizes the whole lake.”
Although JD.com, No. 1 in the Internet Retailer 2015 China 500, is growing its sales at twice the rate of Alibaba, its second quarter sales were still only 17% that of Alibaba. Alibaba is not ranked in the China 500 because it operates online marketplaces and does not own any merchandise.
To compete with Alibaba, JD.com forged a partnership last year with China’s largest social media company, Tencent Group, aiming to attract consumers through Tencent’s popular social media platforms WeChat and QQ.
Meanwhile, Alibaba bought 20% of shares of Suning, an operator of retailer stores that sells online and competes with JD in the consumer electronics category. Alibaba and Suning are working closely on cross-channel promotions.
Amazon China, No. 5 in the China 500, also has launched its Singles’ Day promotion section and Black Friday promotions pages.
“We hope you can save your money on Singles’ Day and spend much more on the next Black Friday,” Amazon China told customers in a post on its Chinese social media account. Amazon China says its sales during its two-day Black Friday event, which is during the Friday after Thanksgiving, were 400% greater than on Single’s Day last year.
Amazon is also increasingly investing in sales of imported products, taking advantage of China’s cross-border e-commerce rules implemented in recent years that reduce the barriers to China consumers buying goods from foreign websites.
The company has localized nearly 4 million products available on Amazon.com, the e-retailer’s U.S. e-commerce site, into Chinese so that Chinese consumers can buy from U.S. sellers more easily, according to Amazon China.
Chinese consumers could browse the products in Mandarin and pay with local payment options on Amazon.cn.