China’s Singles Day beats record breaking ecommerce sales
Forget Christmas, Cyber Monday or Black Friday. Singles Day, or Guanggun Jie is one of the biggest days of the year in terms of ecommerce sales in China. This annual celebration of bachelor life takes place every 11th November and is a hugely important day for retailers to launch promotions and maximise sales. This year’s figures have come as no surprise, seeing major brands like Chinese owned Alibaba reach sales of record level heights. By 1:04pm on the day, China’s largest ecommerce company saw sales hit Rmb19.1bn ($3.1bn). This is the equivalent to last year’s total sales on Singles Day (2012) and almost double to what was reached in 2012 in the USA Cyber Monday after Thanksgiving. But the number didn’t stop here. Figures almost doubled by midnight reaching a staggering Rmb35bn ($5.7bn) in sales.
While the western world picks up its sluggish economic woe, China continues to grow at speed surpassing established global markets. In 2012, revenue from online sales in China reached $190bn-$210bn; only second behind the USA whose market totalled $220bn-$230bn, according to McKinsey’s research. Furthermore, McKinsey forecast that China’s market could reach $420bn-$650bn in online sales by 2020. An exponential growth that will continue to rise as infrastructure improves across the country.
Retail sales are the backbone of B2C ecommerce spend in China, worth an estimated $74.98 billion in 2012 – that’s up 145% from the previous year (2011)1. But the industry is far from ready with many factors worth considering upon entry:
1. The Chinese online industry is largely dominated by domestic giants such as Alibaba. In 2010, 81% of China’s ecommerce transaction value flowed through these portals, selling 48,000 products per minute (Boston Consulting Group research).
2. Availability and value – Ecommerce is driven by consumers accessing goods that are not often available within Tier 2 cities (a majority of provincial capitals in China). Often cash rich customers seek to purchase foreign luxury goods online that may not be readily available offline.
3. Rapid growth brings rivalry – Fierce competition has prompted offline and online stores to raise the bar when it comes to pricing. This was particularly evident in 2012 when a home electrical price war occurred between China’s top electronics e-tailers 360buy.com, Suning and GOME. This continues to happen across a variety of industries including but not limited to software and retail. Presumably as consumers continue to gain confidence in purchasing online this may continue to incite competitive pricing. Digital marketers are strongly advised to identify the brand’s positioning in the market and ensure the marketing mix differentiates its proposition without compromising its perceived value to the consumer.
4. Mcommerce, is a relatively young platform in China. With figures for smartphone users expecting to increase significantly over the next few years, growing from 208.5 million in 2011 to 591.6 million by 20172. A responsive design website is highly recommended to capture this rapidly growing audience and ensure on brand consistency. Remember, to adapt your website design and usability to this market’s needs. Cultural MVT is a must to maximise revenue, performance and functionality for the end user. Hire an expert such as Oban who can take the pain out of this highly intricate process – with the inside knowledge of what works in cultural MVT tests (and what doesn’t!) this will be integral to making or breaking an online business. Don’t forget if you don’t test you run the risk of losing your customers before you’ve even captured them!
5. A shortage of third-party data tracking and analysis services in China prevents businesses collating quality insights on online performance. Do your research and ensure these are set up before market entry.
1. eMarketer – China Ecommerce: a developing market begins to boom 2012
2. eMarketer – China Mobile Advertising: The Long Wait Is Over