China’s Biggest, Most Exciting Singles' Day Yet
Online shopping in China is immense. If you were unaware of that, there’s a good chance that your thoughts of China conjure scenes of Mao-suited men emotionlessly sorting screws in a crowded assembly line.
To get an appreciation of the scale of ecommerce in China, we only need to look at the 9.9 billion cardboard boxes and 8.3 billion plastic sleeves packing online purchases in 2015. To keep those boxes intact, over 12 metres of adhesive tape was used for every woman, man and child in China - almost 17 billion metres of it - enough to tape up the equator 425 times.
If you're still not impressed, try honing in on one day in particular - November 11. Over 3% of the value of products sold on Alibaba’s retail platforms last year were concentrated into that 24 hour period.
Singles' Day, Double-11 or 11-11 is the lion in China's online jungle - a lion that keeps growing bigger and roaring loader. Last year, many predicted the world's biggest online shopping day had reached saturation point, with previous mouth-watering growth rates too high to be sustained. Alibaba proved them wrong, transacting sales of $14.3 billion over the day - 55% more than 2014.
Alibaba's secret sauce has been to continue to make their big day more innovative and exciting than the last, keeping it engaging for a Chinese population who tend to bore quickly. Last year they created a carnival atmosphere much akin to the Lunar New Year Festival, reaching an even wider audience through a TV gala preceding the shopping festival. Celebrities such as Daniel Craig (of James Bond fame) and a host of local stars drew 100 million viewers to their TVs.
This year's gala makes last year's look blah. As the strike of midnight inches closer, who better than Katy Perry, China's favourite basketballer Kobe Bryant, US pop-rock band OneRepublic, and other sports stars, musicians and actors to power a four-hour gala counting down to November 11. It will be put together by Hollywood producer David Hill, known for his work on the Oscars, NFL Super Bowls and American Idol. The international line up of stars stays true to previous Singles' Day's global focus, with an expected 40,000 international merchants participating this year.
Yet the TV/streaming extravaganza goes far beyond a few stars on the tube. There'll be interactive spots encouraging the audience shake their phones to win prizes, and a “choose your own adventure” feature where viewers can vote to decide how some segments of the gala play out.
Pokemon Go-inspired augmented reality will encourage consumers to chase Tmall’s cat mascot around online and offline environments to win prizes from merchants such as Shanghai Disneyland and Starbucks. 150,000 VR headsets have been available for ¥0.01 (well under 1 cent) each to allow virtual shopping in stores. 60,000 real-life retailers are integrating an o2o shopping experience in stores such as Uniqlo, Gap and Alibaba's own Suning and Intime. Interestingly, that's just a third of the 180,000 who participated last year.
So will Singles' Day '16 be even bigger than last year? We think there's no doubt - but with a small footnote. Although sales could soar into the twenties-of-billions-of-dollars, it is a bit of a stretch to claim the sales are all happening over a 24-hour period as consumers have been able to 'reserve' products since October 21. Clothing and accessories bought at the interactive "See Now Buy Now" live streamed fashion show as part of the Shanghai Fashion Festival on October 23 will also feed into the Singles' Day figures. Regardless, it is bringing a new level of excitement to online shopping.
Talking about Alibaba being the Amazon and eBay of China is like that naïve vision of Mao suits and screw sorters. The way Alibaba has transformed online shopping and the hubbub that follows is representative of just how far China has come.
For brands participating in Singles' Day, it can cost a lot without any real results. But done well, it can reach a legion of new customers who could be with you for years. China Skinny can assist with that. For those participating in the Singles' Day festivities, we hope you enjoy the show and find yourself some good deals!
Here are this week's news and highlights for China:
Digital China
The 101s of 11.11: 2 minute vid: China Skinny's Mark Tanner talks on Alibaba's official news site about Chinese ecommerce, Singles' Day and its global potential.
Alibaba Kicks Off Singles’ Day Season in Style: Alibaba's interactive event leading up to this year's Singles' Day - the See Now Buy Now Fashion Show was big, with 1.3 million concurrent viewers. China Skinny was there.
Who’s ready to buy a Maserati off Tmall this Singles Day?: Maserati uses Tmall to achieve further reach than its limited distribution. After selling 100 cars in 18 seconds in March, it will offer another exclusive on November 11.
Alibaba Group Reports Quarterly Financial Results: Mobile shoppers account for 78% of sales on Alibaba platforms, with 450 million active monthly users in the September quarter - 30% more than a year ago - spending an average of $23. Shoppers spent $32 each overall. For every dollar of Alibaba earned from its consumer platforms, 62% of it was profit.
China’s Consumers are Livid After Chinese Executives Kneeled to Apologize for the Galaxy Note 7: It's not just Western business people who make cultural faux pas in China. If things weren't bad enough for Samsung in the market already, the Korean company has been slammed in the Mainland after Korean and Chinese execs knelt at a distributor conference to show their gratitude for continuing to support the brand after the exploding battery issues. Kneeling in China is considered an antiquated practice, associated with feudal society (although it has also been used by Chinese companies in the recent past to shame employees).
Chinese Consumers
China 'Fake Sanitary Pads' Scam Sparks Health Concerns: In the latest and one of the worst China fake cases; two suspects have been arrested for making over 10 million fake sanitary towels in a village workshop without sterile facilities in Jiangxi province. The products were sold under the trademark of leading brands such as ABC or Whisper, with authorities describing the production line’s hygiene standards ‘extremely bad’ and likely to cause diseases if used.
Blame Communist China’s Moral Bankruptcy for its Lack of Charity: London-based Charities Aid Foundation ranked China dead last in a new worldwide survey on generosity, with the percentage of people in each country who donate money, volunteer or help a stranger ranked 140th. Myanmar topped the index, followed by the US and Australia. Myanmar’s overall score was 70%, China’s was 11%. While 63% of Americans donated money to a good cause, just 6% of Chinese say they have and 4% volunteered their time.
Wang Jianlin Retains Top Spot On 2016 Forbes China Rich List: Wang Jianlin, Chairman of Dalian Wanda Group, retains the No. 1 spot on the 2016 Forbes China Rich List as his net worth rose to US$33 billion from $30 billion last year. He is one of 400 billionaires in China, almost 20% more than last year's 335, with the top-end of the list dominated by Internet-related entrepreneurs. Wang Wei, chairman of delivery firm S.F. Express, was the fastest riser to take 4th spot at $18.5 billion, up from $4 billion last year.
Food & Beverage
China's Online Food Ordering Market Matures With 75% Penetration Rate: Over 75% of online Chinese have used their mobile to order food according to Tencent research. That compares with 35% two years ago and just 5% in the US. 52% of those surveyed have reduced the number of times they cook at home due to the convenience of ordering in.
Selling Australia into the China Dream: Australia may have a strong reputation in China for clean, green, safe and reliable food; but lack of a clear brand is confusing to many Chinese and costing the country dearly. Australia will never compete on price, with the cost of processing beef 300% more than Brazil and 1,000% more than Indonesia.
Chinese Tourists
Alibaba’s Flying Pig Travel Service Becomes Ethnic Flashpoint in China: A Muslim entrepreneur’s criticism of Alibaba's rebranding of Alitravel to Flying Pig Travel, or Fliggy, sparked an online backlash after he said it would turn Muslim customers off as they abstain from pork. A wave of invective, unflattering stereotypes against the entrepreneur and other mainly Muslim Uighurs ensued. State media cited the original post and quoted people criticising it for injecting religion into commercial matters.
Property & Finance
China Property Buyers Are Loading Up On Easy Credit In Order Not "To Miss Out": Easy credit has seen strong growth in China's property market, with 8% of respondents in a UBS survey saying they bought property as an investment but intended to leave the property empty; 23% bought property as an investment and planned to rent them out and; 7% said they acquired the property as they "didn’t want to miss out." 45% purchased property for themselves to live in while 17% for family members to live in.
US Most Likely Country to See High-Net-Worth Chinese Immigration: The US is pulling away from the rest of the world when it comes to preferred destinations to park one's families or money. In the next three years, 60% of high-net-worth Chinese consumers are likely to purchase investment real estate properties in the United States, especially in Los Angeles, San Francisco and Seattle according to Hurun.
Luxury
Chinese Shoppers’ Share of Global Luxury Purchases Drops to 30%: Even as China’s luxury market growth re-emerges into positive territory after two years of recession, 2016 marks the first time in history that Chinese consumers contributed less to global luxury sales than they did the year before, dropping 1 percentage point according to Bain.
How to Beat a Recession: Coach’s Comeback in China: Coach has seen a turnaround in sales, with strong growth after the past three consecutive quarters, helped by strong social media marketing and less blingy products. Most sales are mid-ranged products. The company has also reduced the frequency of sales in the US as this affected sales in China due to daigou.
That's the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
