November’s holiday sales extravaganzas have gone global. China consistently sets global sales record at this time of year. That’s why U.S. and foreign retailers and brands should pay close attention to this massive retail market this month, as China’s e-commerce leadership influences global retail trends.
As the biggest retail event in the world, Singles Day 2017 earned an astounding $25 billion for e-commerce powerhouse Alibaba and $19 billion for rival JD.com. Singles Day falls on Nov. 11, kicking off China’s packed holiday season, which also includes Black Friday, Cyber Monday and Christmas. These sales holidays attract a growing number of Chinese shoppers who seek international products through cross-border e-commerce.
On Singles Day, Chinese shoppers buy everything from home appliances to socks. The 2017 results prove consumers increasingly buy through cross-border channels. While data shows only 5.4% and 4.9% of sales on online marketplaces Tmall and JD, respectively, came from their cross-border platforms, on an absolute basis these numbers grew faster than ever.
For Singles Day 2018, Tmall Global will host more than 19,000 merchants from over 75 different countries selling through cross-border e-commerce in five categories: beauty and cosmetics, food and nutrition, mom and baby, apparel and accessories, and life and electronics.
Even Tmall’s homepage for mainland China emphasizes cross-border e-commerce, highlighting kids’ vitamins from U.S. supplements brand ChildLife, as well as U.S. supplements brand Nordic Natural and New Zealand health and nutrition brand Red Seal.
American and international retailers should note the strategic significance of China’s Black Friday sales campaigns, which start once Singles Day ends. While Singles Day is important for general e-commerce customers in China, Black Friday campaigns target cross-border e-commerce consumers.
China’s Black Friday shoppers demonstrate loyalty for foreign brands selling quality products. Last year, 91% of Black Friday consumers cited quality as the rationale for their purchases (versus 63% citing discounts). According to Amazon data, U.S. and foreign brands dominated China’s Black Friday sales. Best-sellers included Similac and Aptamil for mom and baby products; Olay, Foreo and Burt’s Bees for beauty and cosmetics; and Under Armour for sportswear.
Given the high volume of consumers and brands participating in Singles Day sales, the competition is much fiercer, making it difficult for brands to stand out. According to Kantar Consulting, cross-border e-commerce shoppers seek quality, prestige, and better prices.
These results suggest merchants should avoid heavy discounts to protect their brand value, as lower prices are only one factor behind Chinese consumers’ cross-border e-commerce purchases.
Retail and tech have become enmeshed, as mobile pay demonstrates. Ant Financial, which owns Alipay, is an affiliate company of Chinese e-commerce powerhouse Alibaba.
This relationship matters because Chinese consumers prefer to go cashless, using mobile payment options. Pervasive mobile payment options in China include WeChat Pay and Alipay.
Ipsos found mobile payments in China jumped almost 29% year over year in 2017. In addition, 26% of Chinese respondents carry less than 100 RMB ($16 USD), and 14% no longer carry cash. Always-on consumers appreciate the convenience of “going cashless” by simply tapping their mobile phone to pay for products and automatically earn loyalty points.
When it comes to e-commerce, mobile payment is a must-have infrastructure and an increasingly popular and powerful marketing tactic. Merchants often display coupons in the after-pay page to attract customers for subsequent purchases. This year Alipay is holding a mini gamble game in which winners receive coupons as rewards for shopping on Singles Day, to encourage sales.
Adapting to Chinese consumers’ expectations of mobile pay options can help U.S. and foreign retailers remain relevant and competitive by offering an easy, smooth, and interactive customer experience.
