Bonanza Power
Double 11 shopping spree shows recovery of domestic demand
This year, Kiki (online name) gained more happiness from purchasing experiences during the annual online shopping festival than earlier. The 20-something bought 26 items including clothes and cosmetics on November 1 and 20 of them were delivered the very next day, Kiki posted on the social media platform Weibo.
According to tech company Alibaba Group that initiated the sales promotion campaign in 2009, the one-day event on November 11 was extended with presales beginning on November 1 and the second round of promotions started at midnight on November 10.
Millions of consumers like Kiki participated in the shopping bonanza with no less enthusiasm compared with previous years as the impact of the novel coronavirus disease (COVID-19) has largely eased domestically. By November 12, the total gross merchandise volume of Alibaba’s online marketplace Tmall reached 498.2 billion yuan ($74.1 billion). During the peak period, 583,000 orders were made in a single second on the platform, hitting a record high.
Tmall saw the highest-ever participation with more than 800 million consumers, 250,000 brands and 5 million merchants involved. About 25,000 overseas businesses from more than 220 countries and regions also participated. With confidence in domestic consumer demand, Tmall introduced about 2,600 new foreign brands and over 2 million new products this year, the company said.
Other e-commerce sites such as Jd.com and Suning.com also saw strong sales growth. Jd.com, which launched its Double 11 promotion in late October, generated 271.5 billion yuan ($40.9 billion) in sales by November 12. Online orders of Suning.com from midnight on November 1 to 1 a.m. on November 11 surged 72 percent year on year.
“The extension of the Double 11 promotion period has eased the pressure on the logistics industry and improved the shopping experience of consumers. After an epidemic-induced slowdown in consumption earlier this year, the promotions can help boost domestic demand,” Pan Helin, Executive Director of the Digital Economy Academy of the Zhongnan University of Economics and Law, told Beijing Review.
Resumption and growth
Although retailers saw a sales decline earlier this year when the epidemic affected production and logistics, the increase of indoor activities provided opportunities for online platforms to expand consumer base and keep sales more stable compared to the brick-and-mortar stores. According to the National Bureau of Statistics, online retail sales of consumer goods fell only 0.8 percent year on year in the first quarter, while overall retail sales declined 19 percent.
With the resumption of business activities and consumers’ confidence, online retailers have reversed the decline of sales. Gao Feng, spokesperson for the Ministry of Commerce, told a press conference that online retail sales exceeded 8 trillion yuan ($1.19 trillion) in the first three quarters, up 9.7 percent year on year. Notably, online retail sales in rural areas reached 1.2 trillion yuan ($181 billion) during the period.
The courier industry has fully recovered after the easing of epidemic control measures. According to the State Post Bureau, more than 60 billion parcels were delivered in China by October 18, nearing the annual total of 63.5 billion in 2019.
E-commerce platforms have enhanced the efficiency of delivery services by introducing presales and sending parcels to warehouses nearest to consumers through smart supply chains. About 100 million consumers picked up their parcels at nearby outlets during the presale period of November 1-3 after placing orders online on November 1, according to Cainiao Network, Alibaba’s logistics arm.
“The development of the express delivery industry relies increasingly on technologies. To improve competitiveness, delivery companies can further apply the Internet of Things to provide better services,” Pan said.
Green delivery has received more attention. Cainiao added another 12,000 recycling outlets for disposing of used bags and boxes for the shopping festival. Recyclable paper boxes and bags were also promoted.
Continuing trend
Live-streaming shopping saw significant growth earlier this year when many brick-and-mortar stores turned to online marketplaces to make up for losses during the epidemic. It continued to play a major role in attracting buyers to e-commerce platforms around the Double 11 promotion.
In their shows on Taobao, another online marketplace of Alibaba, on October 21, top livestreaming hosts Viya and Li Jiaqi generated 7.8 billion yuan ($1.17 billion) in combined sales within a few hours. The number of views exceeded 300 million. On midnight on November 1,
Jd.com saw sales exceed 100 million yuan ($15 million) in 10 seconds through live-streaming.
“Live-streaming allows consumers to engage in online sales more deeply and can encourage potential buyers to make orders during the real-time introduction of products,” Cui Lili, Director of the Institute of E-commerce at the Shanghai University of Finance and Economics, told Beijing Review.
To stand out in competition, e-commerce giants have been expanding into more industries, such as real estate. Tmall and Suning.com both entered into cooperation with property enterprises to sell houses and coupons for house purchase through live-streaming during the promotion.
Instead of cooperating with other e-commerce giants, video-sharing apps Douyin, the Chinese version of Tiktok, and Kuaishou developed their own e-commerce platforms this year. A live-stream by host Xinba on Kuaishou on October 21 generated sales of over 800 million yuan ($120 million).
Many traditional foreign trade enterprises have also adopted live-streaming to tap into the domestic market.
On November 1, manufacturing enterprises in industrial hubs including Guangdong Province in south China and Zhejiang Province in the east saw their combined turnover exceed 100 million yuan in just one hour.
In Shunde, a major manufacturing base of household appliances in Guangdong, many original equipment manufacturers took the opportunity of the Double 11 promotion to further shift to independent branding. On October 20, a Taobao livestreaming center based in the city saw the single-day turnover of local household appliance products reach 1.3 million yuan ($196,000).
According to Pan, live-streaming on ecommerce platforms provides enterprises a new way to tap into the domestic market and helps consumers to get access to highquality products more directly.
Persisting problems
In addition to demonstrating the purchasing power of Chinese consumers, the shopping carnival also triggered greater calls for protecting consumers rights and interests.
Online platform 12315, launched for consumers to lodge complaints and seek consultations with sellers, received over 20,000 complaints related to live-streaming in the first three quarters, among which nearly 60 percent were related to purchases of goods. Some sellers delivered substandard products to consumers and refused to make refunds later.
“Industrial standards for live-streaming need to be improved. However, the regulation should not come at the expense of the rapid growth of the industry,” Pan said. On October 20, the State Administration for Market Regulation issued a regulation draft on online trade, which clarifies provisions on transactions during live-streaming.
The paid seckill service—buying something within a limited time—is another problem. Since such services can lead to the leakage of personal information, related departments need to trace both the service providers and buyers to better regulate the online marketplaces, he said.
Confused by complicated rules for discounts and changes in prices of products, many consumers and even sellers bowed out of the promotion this year.
Netease Yeation, the e- commerce branch of the Internet company Netease, said on November 4 that it would not participate in the Double 11 promotion this year. It hoped to offer subsidies while avoiding complicated promotional activities. Some said that the company only changed the way of its sales promotion, while there were also netizens lauding it for discouraging excessive consumption, saying consumers expect simpler rules and tangible benefits.
Since offline consumption is on the way to resumption amid the e-commerce boom, Cui suggested that online sales could be further integrated with offline businesses. “Consumers with unclear demands can try products and services in brick-and-mortar stores and make purchases, which can expand consumption and drive economic recovery,” she said.