This was the doorway of an express company in Guangzhou on November 12th 2012. Its warehouse could not accommodate all the packages received from Taobao on “11.11 Singles’ Day – Online Shopping Festival”. Never heard of it? On that single day, 72 million online-shopping-packages were sent out. This amounted to RMB19.1 billion transactions which is equivalent to about US$3 billion. The Singles’ Day promotion was created by Taoba and targets single men and women of China. It is neither traditional nor official but for this one special day, Taobao’s Tmall offered huge discounts to online shoppers.
These results complete eclipse the combined sales online during BOTH Black Friday and Cyber Monday in the US this year:
This year’s Black Friday saw an increase in online sales by 26% to $1.04 billion. Cyber Monday sales reached a record $1.25 billion, up over 20 percent from last year, to become the heaviest online shopping day in American history. According to the Wall Street Journal, this is only the second time a billion dollars in online commerce has occurred in one day. And yet, on the other side of the world, Taobao’s Single’s Festival delivered nearly three times the turnover.
More than ten years ago, when e-commerce was sprouting in China, some retail professionals asserted that three barriers – “trust”, “payment method” and “delivery” would prevent an e-commerce explosion.. Taobao has conquered the three barriers completely. Founded by the Alibaba Group on May 10th, 2003, Taobao Marketplace facilitates C2C and B2C retail. The marketplace structure has effectively emulated and built on the core concepts which drive trust in ebay. Tmall’s payment system, Alipay shares similar functionality with PayPal and Taobao’s delivery system is unsurpassed in China.. This system has made availability ubiquitous, which is essential to online shoppers.
E-commerce still has a long way to go in China: according to the transaction data for the “Single’s Festival”; sales are clustered around the affluent tier one conurbations. But it is not hard to imagine more and more people living in less developed districts joining this “online-shopping army” in the near future as availability to consume improves.
Transaction by City (unit: million)
China’s e-commerce world is not only a huge opportunity for Chinese retailers; increasingly, international retailers also see this trend. The international fashion giants like Uniqlo, Gap and Forever 21 took part in TaoBao’s campaign. Forever21 launched its Tmall on Taobao almost at the same time as they opened their first bricks and mortar store in China. This underlines the necessity to build multi-channel environments as a critical success factor in China.
China’s e-commerce rise is of global significance; it demonstrates that the massive emerging economies of Asia are ripe for online shopping. With 200 million potential online shoppers in China alone (according to BCG), it’s easy to predict that these markets potentially dwarf the US and Europe combined. Today much of the world’s focus is on the changes on retail in the developed markets but the changes in emerging Asia are likely to be faster, more dramatic and more profound. This will require some major re-thinking in sales, marketing and logistics.
What has been seen recently is just the beginning, China’s e-commerce boom is soon to be tested again . Taoboa has announced another campaign just one month after their succes, the “12.12 Shopping Festival”. They have promised even lower discounts. This could be the biggest online shopping day ever!
Researched and written by Irene Luo (engage Shanghai) & Toby Desforges