Deals of the Day The Singles’ Day sales bonanza reflects recovery of domestic consumption in China
The Singles’ Day, or Double 11, celebrated on November 11 in China, sparks a frenzy of online shopping each year. Jack Ma, founder of Alibaba Group, China’s e-commerce giant, was the first to seize this opportunity when he launched the shopping festival, an online shopping event equivalent to the U.S. Black Friday, in 2009.
This year the sales on the day broke a new record. Revenues on Tmall, Alibaba’s leading platform, reached 498.2 billion yuan ($75.98 billion). At the same time, Jd.com, Suning.com, and some other leading e-commerce platforms also achieved strong sales performance.
The success of this year’s Double 11 shopping carnival, which took place in the shadow of the COVID-19 epidemic, revealed that the appetite and purchasing power of Chinese consumers remain very high.
China is currently promoting the “dual circulation” development pattern, in which the domestic and foreign markets complement and reinforce each other, with the domestic market as a mainstay. This year’s impressive sales figures demonstrate the country’s economic resilience and vitality. The Double 11 shopping festival is not just a nationwide online shopping event but also a driving force for the Chinese economy.
Consumption, one of the three essential factors of national economic growth, experienced a short-term decline in China earlier this year but quickly stabilized and recovered thanks to the effective control of the epidemic. According to the National Bureau of Statistics, in the first three quarters of 2020, total retail sales of consumer goods in China increased by 0.9 percent year on year, and online retail sales increased by 9.7 percent. In particular, in the third quarter, China’s economy grew by 4.9 percent from the same period last year. This sustained recovery in consumer spending will be critical to China’s economic recovery.
This year, the Double 11 shopping festival was held in two phases, on November 1 to 3 and on November 11.
“I love this phased event,” said Li Yueyue, a 23-year-old college student from Beijing. Her shopping list has been ready since October 21, with a large selection of products. “I think that the shopping event should be like this every year, in two parts. The prices are affordable, and consumers have more time to select their favorite products,” she added.
Holding the festival in two distinct phases helps reduce pressure on retailers, sales platforms, and logistical services and improve their performance. On the other hand, it enhances the consumer experience, said Fu Yifu, a researcher at the Suning Financial Research Institute.
Besides the robust online deals, the sales of bricks-and-mortar stores also saw a big rise this year. Apart from that, online platforms also cooperated with physical stores to provide multiple choices for consumers.
Alipay, Alibaba’s mobile payment platform, has been working with delivery companies, restaurants, hotels, and other businesses. Jd.com has launched an offline consumption program, supporting nearly 1 million small businesses during the Double 11 period. Liu Yi, a Beijing consumer, prefers to shop offline. “I like to see what I buy,” she explained.
Resuming production
This year at Tmall, the Double 11 event attracted more than 800 million consumers, 250,000 brands, and 5 million retailers, making it the most extensive and participatory edition.
According to a survey conducted by the National Association of Small and Medium Enterprises nine months ago, nearly 40 percent of the 6,422 SMES surveyed have gone out of business due to the epidemic. More than half are out of stock, and foreign orders are down 70 percent compared to the previous year. Some of the SMES survived and are now the leading suppliers for the Double 11 spree, which has become an essential part of the supply chain.
Furniture manufacturers have been hard hit, losing most of their orders from foreign customers. Zeng Juanjuan, Director of a furniture factory, turned to online platforms for boosting domestic sales. For the first time her company participated in the Double 11 festival. “The sale was held in two phases this year. During the first round, we were able to achieve more than half of our usual sales revenue,” she said.
In addition, a trend of “industrial zones + e-commerce” was also noticeable throughout this period. Increased digitalization has not only brought extra points of growth for companies but also accelerated the transformation of traditional industrial structures.
This year, Tmall strengthened its efforts to support factories by launching a production allowance and consumer vouchers. In a report, the platform noted that the dual national and international circulations have resulted in the creation of 105 industrial zones, each generating more than 1 billion yuan ($15.3 million) in sales. These include the Guangdong Domestic Lighting Specialized Zone, Hangzhou Clothing Specialized Zone (Zhejiang), and Ganzhou Furniture Specialized Zone (Jiangxi), among others.
Industrial zones are economic zones that connect different production chain elements, such as manufacturing and raw materials, and can provide comprehensive services. However, the products manufactured there have no brand influence and, therefore, a limited sales capacity. By partnering with e-commerce platforms, industrial zones can directly supply the entire production chain. This is why this trend became popular during the Double 11 period, according to Zhao Ping, researcher of the China Trade Promotion Association.
One of the objectives of the Chinese Government this year is to protect all market players. This year’s Double 11 shopping festival was characterized by the participation of many SMES, foreign trade companies, factories, and agricultural product companies. Most of them were first-time participants. “This is further proof of the social responsibility of the e-commerce platforms to promote new brands and SMES,” said Hu Qimu, chief researcher of a think tank on the digital economy.
But beyond the general promotion, the rules of the e-commerce platforms remain vague: For instance, sometimes it is difficult to find one’s way through all the discounts on offer. In some cases, merchants raised prices beforehand and then lowered them during the Double 11 shopping period. Faced with such practices, the regulatory department has published guidelines to regulate promotional events.
“The new directives are conducive to regulating the market, safeguarding consumers’ rights and interests, and creating a fair market climate,” said an official from the General Administration of Market Control and Administration. CA