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CBBC Insights: Retail | Chinese e-commerce industry changes shape as Singles’ Day breaks more records

BritCham / CBBC
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As this year’s Singles’ Day, also known as ‘Double 11’, came to a close at midnight on the 11th of November, all of its previous records were once again comfortably surpassed. Singles’ Day, a theme which has been dominated by its original inventor, the e-commerce group Alibaba, reached new heights this year, both in the sheer volume of revenue and the number of brands taking part.
 
Although it takes place only in China, orders are placed from across the globe, a fact Alibaba has been keen to point out in its presenting of Singles’ Day as a ‘Global Shopping Festival’. This year, the country with the most orders outside China was Japan, followed by the USA, South Korea, Australia and Germany.
 
A number of British household names also did well. According to Jasmine Chambers, director of e-commerce for China at the Royal Mail: “More than 7,000 orders were made on Royal Mail’s Tmall store in the first 100 minutes this year. According to Royal Mail research, China is now the biggest overseas consumer of British products online, accounting for 25% of overseas online shoppers purchasing goods from the UK.”
 
E-commerce solutions provider Azoya identified two specific trends which stood out on Singles’ Day 2016. The first is evidence of major e-commerce players strengthening their collaboration with key opinion leaders (KOLs), and the second is that live-streaming has become noticeably more popular among Chinese e-shoppers. Other underlying themes of this year’s Double 11 were the introduction of new promotional tools leading up to the event, such as augmented reality games and fashion shows, as well as online-to-offline commerce.
 
Alibaba’s upward GMV curve
Once more, the staggering numbers surrounding the event were the main talking point. The US$17.8 billion in gross merchandise volume (GMV) on the day puts the US’s rough equivalents, Black Friday (US$4.5 billion) and Cyber Monday (US$3 billion), in the shade. The year-on-year rise in sales for the event has also been impressive. Since its conception in 2009 it has continued to grow rapidly, though this year’s event did see a smaller increase of 32.3% compared to 59.7% in 2015 (see graph below for GMV per year). 
 
 
Gross merchandise volume on Singles' Day. Source: GroupM
 
Notably, the share of people using their mobile phones to place orders is now greater than ever, moving up from 71% in 2015 to 81.9% this year. The ranking of cities with the highest demand remains unchanged as the volume of orders was heavily reliant on urban areas. The areas with the most orders were: Shanghai (14.5%), Beijing (10.5%), Guangdong (10.3%), Zhejiang Province (9.3%) and Jiangsu Province (7.9%).
 
The beneficiaries
UK fashion retailer New Look told Drapers magazine that it had witnessed “spectacular” growth this year on Singles’ Day, particularly in accessories and footwear. A Topshop spokesman said sales were “significantly” up over the same period last year, largely driven by denim and styles from within its Petite range. The British men’s grooming product company Truefitt & Hill also saw an increase in their online sales; in the run-up to 11 November they had actively participated in offline events such as the British Motorsport Festival and others to expand brand visibility.
 
New strategies
Recent years have seen a shift in strategy by several of China’s e-commerce platforms. Some have made Double 11 part of a series of promotions. JD Global for example kicked off its Black Friday (25 November) promotions right after Double 11, while Feelunique offered a “Black Sale” to Chinese e-shoppers from 21 to 25 November. And in a move which will significantly increase the amount of merchandise made available to the Chinese market, Amazon China now allows Chinese consumers to access its Prime annual membership programme and seasonal hot buys from Amazon US and Amazon UK.
 
Policy developments
In a positive sign for the e-commerce industry, on 15 November the Chinese Ministry of Commerce announced that it would postpone the application of regulations regarding taxes and registration/filing requirements for online retail goods, also known as the “April 8 New Policy”, until the end of 2017. 
 
By delaying the regulatory changes for a second time, the government is allowing cross-border e-commerce retailers, cosmetics and healthcare brands in particular, to adjust their business models and make essential preparations before the policy changes come into force. 
 
It is still unclear whether the effective date of this new policy will be postponed even further, but according to Jeff Astle, executive director of the China-Britain Business Council, “This is a positive signal that the Chinese government is seeking to reach a balance between regulation and tax revenue, which should help the growth of cross-border e-commerce.”
 
For more information please contact the author, Demi Ping, assistant director for retail and e-commerce at the China-Britain Business Council: demi.ping@cbbc.org.cn.
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