100 million in 55seconds; 1 billion in 6 minutes and 7 seconds; 10 billion in 5 hours and 49 minutes …… and finally, 35billion in 24hours! These are trade volume records on Taobao.com on the 11.11 Shopping Carnival in 2013. What on earth had happened this day? And what impact does this have on the whole China retailmarket?
First let’s look at the numbers. RMB 35 billion is equivalent to about $5.74 billion. It sounds as an impressive amount for one day trade, but how much is it? Well, the United States two most popular sales days ‘Black Friday’ and ‘Cyber Monday’ in 2012 accounted for a total online spending of approximately $1.5 billion, which means Taobao’s 11.11 shopping carnival sales are almost four times as much as that of the biggest online sales days in the US. That is pretty impressive!
11.11 Shopping Carnival (on 11th Nov.) was initiated 4 years ago by Taobao — the biggest and most important B2C ecommerce platform in China. The huge success of the Shopping Carnival this year undoubtedly strengths Taobao’s NO.1 position in China. There are many factors leading to this massive success. And we believe the two biggest contributions are: 1) the changing lifestyle of the Chinese people; and 2) Taobao’s great marketing strategy for promoting this big day. We will discuss both reasons in more depth in a next blog, but here we first like to provide you with a more general picture of this important day in the Chinese e-commerce market and its impact.
Compare to last year, there are two developments that are important to mention:
Firstly, Taobao’s online payment system Alipay this year has included 45.18 million times mobile payment, that’s 24.03% of the total volume and generated RMB 11.3 billion, a new global record of mobile payment. This shows not only that the mobile online payment in China has developed to a relatively high level, but also indicates mobile trend in China is developing very quickly in spite of relatively disadvantaged mobile internet speed compare to the US, South east of Asia countries and Europe.
Secondly, for the first time some financial products have taken part in this shopping carnival. And the first trial has already created great success for some of them with more than RMB 100million sales, achieved by those products that promised a high return rate and used effective promotion. It is interesting to see that these financial products are finding their way online, especially since the ‘traditional’ financial industry in China is heavily regulated. One challenge for these financial products is that there is a need to adjust traditional sale and marketing practices to overcome the double boundaries: people have less trust through the internet, and ‘normal’ people are not familiar with financial products in general.
However, if Taobao’s 11.11 shopping day has any positive impact on domestic demand is hard to say. To the traditional retail trade, it’s rather invading. Taobao’s founder Ma Yun (Jack Ma) from Alibaba Group (the mother company of Taobao) has already made this clear in his statement last year: “11.11 shopping carnival is a signal of economy transition in China, it is a war between a new marketing model and the traditional ones”. To itself, this shopping spree is also considered to be overdrawing. Many ecommerce experts in China worry the market will need couple of months to recover to normality after this day. And if it can really profit the online shops, is also a big concern.
What’s more, it presents a big challenge to the logistic companies. 180million post parcels were estimated to be delivering in the coming week. Which means that if logistic companies are not well prepared, it will suffer a warehouse explosion like they did in 2009. Of course, after the 4 years ‘training’ from the 11.11 shopping spree, there is currently more experience and preparations on the logistics. Plus nowadays the buyers can trace their orders’ delivery state very easily in their Taobao account, which helps with easing the anxiety waiting for the parcel’s arrival.
So, despite all these side effects of this shopping carnival, it should be obvious that online shopping, once served as a complement in retail industry, is now quickly becoming the most important channel to promote and sale domestic goods Actually, e-commerce is not only the solution to domestic demand, it is also called “the new silk road of Made in China”, meaning that is a channel that is boosting international trade.
So, did you get the point? It’s not only about the number, but more about the dramatic change of the huge Chinese retail market that is taking place on the background of this event. So are you ready to embrace the new era of shopping in China?
What other ecommerce information do you want to share with us? Leave your thoughts below!