2014 China “11.11” Online Shopping Festival to Set New Record for Single-Day Sales
Beijing, 10 Nov 2014 — China e-commerce giant Alibaba has set US$8.18 billion (RMB50 billion) as its 2014 target of single-day transaction value for the November 11 online shopping festival. IDC believes Alibaba is very likely to achieve 5% more. “11.11” is not only a festival for Alibaba, online shoppers, and online retailers; it also changes consumers’ buying behavior and impacts the evolution of the China e-commerce ecosystem.
November 11, or simply “11.11”, has become a special day for many Chinese consumers ever since Alibaba created this single-day online shopping festival in 2009. The total transaction value during last year’s “11.11” reached US$5.73 billion (RMB35 billion), which shocked Alibaba’s e-commerce competitors all around the world as well as the entire retail industry.
The performance of “11.11” this year will be of great importance to Alibaba as a newly listed company and to the future of the China e-commerce market as a whole. A sales miracle will definitely encourage Alibaba’s investors and their business partners. Moreover, IDC believes that the business innovations supporting this festival are likely to point out the future evolution trends of the China e-commerce market.
Even though the transaction value for last five years has witnessed a stunning growth rate, Alibaba’s chairman, Jack Ma is still ambitious enough to put Alibaba’s “11.11” single-day sales target to RMB50 billion this year. IDC expects the final results to even overachieve this target by 5% to RMB52.85 billion, or US$8.65 billion.
IDC makes this forecast based on the reasons as below:
- Alibaba has systematical Big Data analytics capabilities and solid experiences to forecast sales numbers. What Jack Ma informs the public should be a number within their capability.
- IDC has made a rough estimation based on the growth of the amount of online shoppers and their average spending. According to IDC, the total amount of online shoppers has grown by 5.13% over last year.
In addition, there are some other factors that will drive the spending this year:
- For the first time ever this year, “11.11” will be a global online shopping festival. Alibaba has invited many global suppliers from more than 20 countries to join this activity. Meanwhile, there will be 27,000 sellers in Tmall , the biggest group ever in the recent years. This does not include sellers in Taobao and other platforms.
- Collaborations with off-line retailers this year will facilitate many offline transactions through Alipay, which will increase the total transaction value. Cars, financial products, travelling services, and other types that were not traditionally common online, will be brought online this year. Therefore, IDC expects the average spending per consumer on “11.11” to grow by as much as 44% this year, and the final sales to reach RMB52.85 billion, which is 51% bigger than last year.
A Festival for the Entire Community
As more and more consumers are familiarized to the “11.11” online shopping festival, it has gone beyond Alibaba and attracted many e-commerce players to join this carnival, including JD, Suning, No.1 Shop, and many other e-commerce and retail companies that have launched their own marketing campaigns for this festival.
JD has paid great efforts on micro-shop promotion with the strong support from Tencent QQ and WeChat. The promotion of shopping on credits with its financial service “JD IOU” will be another selling point. In addition, JD has issued millions of coupons and has offered deep discounts for “11.11” this year.
Suning’s strategy focuses on its omni-channel shopping solution, providing seamless online and offline premium services. High quality with lower price is Suning’s core advantage. No.1 Shop’s strategy is more maverick as they are challenging the Guinness world record on sales by providing huge discounts.
IDC finds that a lower price is still the key to attract Chinese shoppers to join the online sales festival, though we are glad to see some innovations from the marketing campaigns of those e-commerce companies. IDC believes that Alibaba’s competitors’ efforts will affect Alibaba’s sales on “11.11” to some extent, but the impact will not be huge, as these competitors’ online products are not as comprehensive as Alibaba’s yet.
Evolution of China E-commerce Ecosystem
Several years ago, it was hard to believe that the infrastructure of the China retail and logistics sectors could support such a great volume of consumer shopping transactions on a single day. However, this has come true with the upgraded e-commerce ecosystem in China, which is built on the 3rd Platform (cloud, mobility, social and Big Data). One of the meaningful things about the “11.11” online shopping festival is that it facilitates the development of the China business infrastructure, including IT infrastructure, logistic services, etc.
Alibaba is now moving on to build a wider e-commerce ecosystem all around the world. It is likely to create a new order for cross-border business in the future, which will definitely become a huge challenge to the American e-commerce giant, Amazon. Years ago, the “11.11” online shopping festival only happened in China. Now it will go beyond China to other parts of Asia and even to the world. According to Alibaba’s media briefing, shoppers from more than 220 countries can take part in this festival this year.
At the same time, Alibaba is also enhancing the capability of its ecosystem which includes cloud service, logistic service, data analysis ability, etc. It is noteworthy that each consumer will have his/her personal shopping web page during this festival, empowered by Alibaba’s powerful Big Data analytics.
Changes in Consumer Behavior
IDC believes that mobility and online to offline (O2O), or the so-called omin-channel will be two important aspects of the changes in consumer behavior. The “11.11” online shopping festival in 2013 achieved 45 million payment transactions through the Alipay mobile app, which counted for 24% of Alibaba’s total payment transactions and 32% of its total transaction value on that single day in 2013. This number is expected to be higher on “11.11” this year.
Mobility is so important that Alibaba needs to demonstrate its ability in mobile e-commerce at every opportunity. As one of its main competitors, Tencent (Wechat) occupies the dominant position in social networking and mobile IM in China, which has been imposing huge pressures on Alibaba’s future development in mobile Internet.
Meanwhile, as O2O shopping has become the norm for consumers, new O2O models will emerge during the “11.11” shopping festival this year. For example, consumers can go to offline shops to get the goods they purchased online. Also, consumers in offline shops can get coupons for future shopping by scanning the QR codes on the packing bags. Aside from that, membership can be recognized in both online and offline shops.
IDC considers “11.11” online shopping festival originated by Alibaba as the experimental field for the China e-commerce market’s innovations, which will mean much more than the sales record on that day. IDC suggests that companies in the e-commerce market should focus more on the changes in the e-commerce ecosystem and consumers’ shopping behavior.
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