China’s largest e-commerce platforms have smashed records again in this year’s Singles’ Day.
Alibaba achieved a new record high of RMB 213.5 billion ($30.8 billion) gross merchandise volume, 27% up over last year while JD.com recorded RMB 159.8 billion ($23 billion) sales over 11 days from Nov. 1 to 11, 26% up from the same period last year.
While Singles’ Day has acted as an accelerator of China’s retail development in the past decade, making the country a more vibrant place to buy and sell, this year’s event saw slowing growth in overall e-commerce sales in China.
Overall e-commerce sales grew 23.7% year-over-year this Singles’ Day, compared to last years’ 43.5% growth, according to data from Syntun, a China-based data services company. The rate of growth has been slowing since 2015—although at 23.7%, it remains healthy.
We see the slowed growth attributed to two factors.
First, growth rates in the overall retail market in China are slowing—and this year grew at the slowest pace in 15 years. Year-over-year retail growth in May and October 2018, grew at 8.5% and 8.6%, respectively, the slowest since June 2003, according to China’s National Bureau of Statistics.
The sluggish environment unavoidably impacted e-commerce, too. China’s economic outlook remained uncertain throughout this year owing to the complication of the national deleveraging to ease debts and threats from the China-US trade tension.
The erratic circumstances encumbered the retail market. On the other hand, the drop was a reasonable adjustment to the enduring strong retail growth over the years as the Chinese middle-class cooled down on their shopping frenzy. Amid higher borrowing costs, their attention diverted to more immediate obligations of mortgage and loans.
Second, while Singles’ Day remains the largest online shopping event of the year, other online shopping festivals are muscling in and Singles’ Day is no longer the only time in the year to find good deals. Chinese e-commerce companies have introduced their own cyber shopping festivals, so deep discounts are now offered almost every quarter.
Chinese consumers are now familiar with online shopping festivals and are adjusting buying habits to map to different shopping festivals instead of splurging everything during one sales period.
Growth figures aside, Singles’ Day has changed China’s retail landscape as it continually introduces new brands and products from different countries. For some overseas retailers, Singles’ Day was a valuable opportunity to gain brand recognition in China. The festival does not only let Chinese consumers enjoy a wider selection of products but also allows brands to consolidate their foothold in the country.
Also, we saw Chinese e-commerce companies’ efforts to strengthen warehouse and logistics networks to tackle the ever-challenging task of surging orders in a short period of time.
JD.com is building a cold chain logistics network to cater to the growing demand for fresh food, and can already deliver fresh food to 300 Chinese cities and imported fresh food to China in around 48 hours. This has enabled JD.com to more than double the amount of imported fresh food delivered during Singles’ Day—over 29,500 tons, including 12 tons of live Canadian lobsters.
Artificial intelligence played a key part too. Alibaba employed artificial intelligence to generate 45.3 billion personalized shopping pages for users and AI-powered assistant to handle 98% customer service inquiries during this Singles’ Day.
Smart stores emerge
Singles’ Day has also forced retailers to up their game, upgrading the entire retail landscape and offering shoppers unconventional shopping experiences. Far from being a pure online event, Singles’ Day has quickened the pace of online-offline retail integration, turning more brick-and-mortar stores into smart stores. Advanced in-store technology such as virtual mirrors in smart stores helped raise the awareness of retailtainment that turns in-store shopping into a fun experience.
Partnering with Tencent, JD.com developed an interactive game on WeChat’s mini-program platform to help 200,000 brick-and-mortar stores drive traffic during this Singles’ Day period. Players could earn points based on the number of steps they take, which encouraged them to visit partner stores to earn points for products and prizes.
From connecting China with other countries, boosting the online-offline retail integration to championing the adoption of advanced technology in the supply chain and physical stores, Singles’ Day has demonstrated its value to China’s retail ecosystem.