Chinese retail rush demonstrates market demand for e-commerce solutions

The annual Chinese Singles Day shopping event has again broke the country’s e-commerce records, demonstrating both the demand for online purchases and continued room for smaller players to expand in this dynamic market. This will likely be good news for foreign players such as Amazon that have long considered expanding in China, as well as for tech majors looking for investments in local players able to compete against giants such as Alibaba. London corporate finance has been gradually making inroads into the Chinese market, and small e-commerce players from the country are likely to be making exits this year.

On the 11th of November, 2014, Chinese online shoppers bought an estimated US$9 billion worth of products.  Alibaba, China’s biggest online shopping company, which owns Tmall.com among other ecommerce sites, processed over US$5.75 billion in its online payments system — a record for a single day anywhere in the world. This figure alone surpasses the total for American retailers in 2013 on Cyber Monday by 250%.  Alibaba first latched onto the so-called Singles’ Day, symbolised by the four lonely 1s of 11/11, five years ago.

Other e-commerce companies are benefitting and coming up with their own campaigns.  This year, Dangdang.com, another retailer, started its 11/11 sale three days early. Global firms are participating too. Brands such as Nike, Adidas, Procter & Gamble, Unilever and Samsung Electronics conducted Singles’ Day promotions, many of them using Tmall. Such companies have keenly embraced this activity as a route to selling to Chinese consumers in remote areas, where few have easy access to brick-and-mortar shops. Chinese are also doing more shopping on mobile devices. In the first hour of sales, from midnight to 1 am, Alibaba reports that 24% of orders came in via smartphone.

E-commerce shopping companies like Alibaba build anticipation for 11/11 by letting consumers put items into online shopping carts before the sales actually began. Tmall said five million customers had already selected more than 40 items each on the eve of Single’s Day. But the country is struggling with delivery, largely due to underinvestment in inland logistics infrastructure.Singles’ Day has been so successful that it has already given rise to a manufactured e-commerce event: “Double 12” on the 12th of December.

Total gross merchandise volume (GMV) sold through Alibaba Group’s Chinese and international retail market places grew by 60.3% over last year’s total of $58 billion. Significantly for Alibaba, GMV for transactions made over mobile devices represented 42.6% of sales, a good sign for the company because it has been seeking to expand its mobile business. The rise of the smartphone is likely to offer innovative opportunities to startups able to stand out in a market ruled by giants.

 

 

 

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