Singles’ Day Sales and E-Commerce in China: Behind the Statistics

November 20, 2015 Posted by China Briefing Reading Time: 4 minutes

AB mag 2014 05_e-commerce across asia By Jake Liddle

This year’s Singles’ Day e-commerce event saw sales up 60 percent on the previous year, totaling RMB91.2 billion (US$14.3 billion). 2014’s record was surpassed within 14 hours of the start of the holiday, with US$1.4 billion generated in the first eight minutes, and US$5 billion in the first 90. To put this into perspective, last year’s Black Friday and Cyber Monday events in the U.S. together produced total sales of US$4 billion.

Holiday skepticism

While boasting significant figures, Alibaba’s e-commerce event has also been met with some skepticism, with further slowing of the Chinese economy being the top concern for observers. These doubts have been reflected in Alibaba’s shares, which dropped seven percent within three days of the event; two percent of which on the day of the event itself.

Overall, China’s national consumer spending has been generally weak, maintaining a relative drop in accordance to the economic downturn, with 60 percent of listed department store operators reporting an unnerving decline in sales and net losses during Q3.

Skepticism of the figures stems from the amount of scams associated with e-commerce, namely fabricated or fake orders. Counterfeit goods sold via online vendors participating in the event have also proved a major concern, and could be detrimental to future consumer figures. Alibaba has not included the rate of returns in their calculations – for 2013’s Singles’ Day, China Industry Research Network reported that 40 percent of orders placed were returned, though this figure could be partially due to distribution service personnel damaging fragile goods during the sorting process.

M-commerce

Some commentators have also warned that the increase of internet shopping will hinder prospects for physical vendors. A noticeable trend during this year’s event is that 71 percent of orders placed were made on mobile devices, compared to last year’s 43 percent. This shows that shopping on your telephone is increasingly becoming a cultural norm in China, and a large majority of companies provide rewards or incentives for doing so. Though there are many advantages to moving point of checkout to mobile devices, it must be said that the sharp increase of mobile shopping does not mark the end of brick and mortar shops – consumers will always have the need to view certain products in person before purchase.

The future of e-commerce in China

Following Singles’ Day’s ‘robust’ figures, attention has been drawn to the next big e-commerce event, Taobao Nianhuo Jie or ‘Taobao Spring Festival Product Sale’. Nianhuo refers to special produce particular to Spring Festival, including not only gifts but also the essentials needed for the holiday such as food produce, local delicacies, alcohol, clothing, plane tickets and other high end goods. Aimed at better serving China’s rural population, which accounts for 45 percent of the country’s overall population, the event will also make rural produce readily available to urban areas.Though Alibaba has been running the event for the last few years, this seasonal shopping festival may overshadow Singles’ Day in the future.

This year’s Singles’ Day has shown that, despite the slowing of China’s economy, purchasing power is still strong. China’s online shoppers have so far spent a total of around US$672 billion in 2015, up 42 percent on last year. This figure is set to reach US$ 1 trillion by 2017, according to the Emarketer team.

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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

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