Online Shopping Marathon Zooms Off the Blocks in China
TOKYO - Chinese consumers were taking to the Internet in record numbers on Monday for an annual 24-hour online sale that has ballooned into the world's biggest e-commerce event.
Alibaba, the biggest online retailer in China, said in advance of the promotion that it expected to sell more than 30 billion renminbi, or about $5 billion, worth of goods on Monday - two and a half times the total that 'Cyber Monday,' the biggest e-commerce day of the year in the United States, yielded last year.
The one-day shopping craze, for which Chinese consumers were preparing well in advance of the midnight start, highlights the frenetic growth of e-commerce in China. The country is set to overtake the United States this year as the largest e-commerce market in the world, according to Forrester Research. Chinese consumers are predicted to spend $290 billion at online retail sites, compared with $260 billion for their United States counterparts.
The promotion was pioneered by Alibaba in 2009, when it latched on to an existing, unofficial Chinese holiday dubbed Singles' Day. For some years previously, young Chinese lonely-hearts had been gathering once a year to lament - or raise a toast to - their single status. The event took place on Nov. 11 because it was the only day of the year when the calendar showed four 1's, or 'singles.'
For Alibaba, which operates e-commerce sites like Tmall and Tabao, the day was a prime opportunity to reach these consumers and others, too.
E-commerce shopping companies like Alibaba have built anticipation for 11/11 by letting consumers put items into online 'shopping carts' before the sales actually began. One of Alibaba's sites, Tmall, said five million customers had already selected more than 40 items each by Sunday evening.
Alibaba said it had taken in more than 6.7 billion renminbi in sales in the first hour of the promotion, from midnight to 1 a.m. Monday, through its online payment system, Alipay.
'Chinese consumers are bargain-hunters, and that is what is driving the success of 11/11,' said Serge Hoffmann, a partner at Bain, a consulting firm, in Hong Kong.
Bain expects online shopping in China to grow at an annual rate of 32 percent from this year through 2015. That is a slowdown from the 71 percent rate recorded from 2009 through 2012, but still well above the 13 percent average rate expected for 2009 through 2015 in the United States. In 2015, the firm forecasts, e-commerce will total 3.3 trillion renminbi in China.
In preparation for Singles' Day, Alibaba added extra bandwidth and logistical facilities to deal with an expected surge in demand. The company expected its total 24-hour take to jump from 19 billion renminbi in last year's 11/11 promotion.
While it was Alibaba that turned Singles' Day into a shopping event, other e-commerce companies are getting in on the action, including dozens of Western brands. Companies like Nike, Adidas, Procter & Gamble, Unilever and Samsung Electronics conducted Singles' promotions, many of them using Tmall.
Brands like these have eagerly embraced e-commerce as a way to sell to Chinese consumers in remote areas, who do not necessarily have bricks-and-mortar shops selling Western goods in close proximity.
'Online is giving them a much more effective way of reaching these consumers,' said Bryan Wang, an analyst at Forrester.
Online retailers were offering a range of discounts Monday, with the Chinese version of Amazon touting reductions of as much as 90 percent. But buyer beware: Amid the bargains, there were also plenty of outdated or no-brand products.
For Alibaba, which has been preparing for an initial public offering, a major benefit of Singles' Day is promotional, a spokesman, Yan Qiao, said.
'We are not thinking about how much profit Alibaba could achieve at all,' Mr. Yan said. 'The biggest value it gives us is that the festival always can create the new record of one-day gross merchandise value on Tmall.com.'
Shanshan Wang reported from Hangzhou, China.
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