China’s Online Shopping Marathon Zooms Off the Blocks

November 11, 2013

Online Shopping Marathon Zooms Off the Blocks

By SHANSHAN WANG and ERIC PFANNER

HANGZHOU, China — After moving into a new apartment in this city near Shanghai in August, Yuan Keru, a postgraduate student, and her boyfriend waited several months to buy furnishings for their new home. Finally, on Monday, they splurged. At midnight, Ms. Yuan logged on to her laptop, clicked on the website of Tmall, an e-commerce site, and began shopping. She selected a floor lamp, a carpet and some wallpaper. Her boyfriend picked out a set of earphones. Finally, they added a cozy touch: his and hers cotton slippers for the winter.In all, Ms. Yuan spent 1,500 renminbi, or nearly $250, before calling it a night. That, Ms. Yuan said, represented about half a month’s living costs for her.

“We love window-shopping in the local department store,” Ms. Yuan said. “But we have never spent so much money in one day. Never!”

Ms. Yuan and her boyfriend, a 3-D animator, were just two among tens of millions of Chinese consumers who took to the Internet on Monday for the latest edition of an annual one-day online shopping blowout that has ballooned into the world’s biggest e-commerce event.

Alibaba, the largest 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. By late afternoon, Alibaba had already logged more than 23.8 billion renminbi in sales via its online payment system, Alipay, surpassing the 19 billion renminbi total for the full day last year.

The promotion was pioneered five years ago by Alibaba, which owns Tmall and other e-commerce sites, when it latched on to an existing, unofficial Chinese holiday dubbed Singles’ Day. For some years previously, young Chinese men had been gathering once a year to lament — or raise a toast to — their single status. They chose Nov. 11 because it was the only day of the year when the calendar showed four 1’s, or “singles.”

In a culture where young women face considerable pressure to marry by the age of 30 and where young men are expected to own a home before popping the question, this might have seemed like a rejection of cultural mores and consumerism alike. But, like Columbus Day sales in the United States, Singles’ Day retains little connection with the people or events that inspired it. As a red letter day for shoppers, it has spread beyond lonely-hearts to Chinese consumers of all kinds — single or married, male or female, young or old, urban or rural.

“Chinese people love to shop,” said Eric Wong, managing director for Greater China at Possible, an e-commerce strategy company, in Shanghai. “If you have the right excuse and the right occasion, they will spend money. One of the tactics to get people to buy is to create a more festive occasion.”

The one-day shopping craze highlights the frenetic growth of e-commerce in China. The country is set to overtake the United States this year as the largest online shopping market in the world, according to Forrester Research. Chinese consumers are predicted to spend $290 billion at online retail sites this year, compared with $260 billion for their United States counterparts.

Bain, a consulting firm, 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.

“Chinese consumers are bargain-hunters, and that is what is driving the success of 11/11,” said Serge Hoffmann, a partner at Bain in Hong Kong.

And while Ms. Yuan and her boyfriend were looking for bargains, not everyone was pinching pennies. On Monday afternoon, Alibaba announced to the more than 300 journalists who had gathered at its headquarters in Hangzhou for updates on the sales that a woman from Zhejiang Province had bought a 13.33-carat diamond, costing 20.5 million renminbi.

While it was Alibaba that turned Singles’ Day into a shopping event, other e-commerce companies are getting in on the action, including the Chinese version of Amazon.com. Another online retailer, Dangdang.com, tried to get a jump on Alibaba by starting its 11/11 sale three days earlier.

International marketing giants like Nike, Adidas, Procter & Gamble, Unilever and Samsung Electronics conducted Singles’ Day promotions, many of them using Tmall. Western brand owners, in particular, have eagerly embraced e-commerce as a way to sell to Chinese shoppers in remote areas, where few of them have brick-and-mortar stores.

“Online is giving them a much more effective way of reaching these consumers,” said Bryan Wang, an analyst at Forrester.

The rapid adoption of smartphones in China has made it even easier for these customers to shop from their homes or their workplaces — or while out and about.

In the first hour of sales, from midnight to 1 a.m. Monday, Alibaba said 24 percent of the orders came in via smartphones.

E-commerce shopping companies like Alibaba built anticipation for 11/11 by letting consumers put items into online shopping carts before the sales actually began. Tmall said five million customers had already selected more than 40 items each by Sunday evening.

In preparation for Singles’ Day, Alibaba added extra bandwidth and logistical facilities to deal with an expected surge in demand. By late afternoon, the Alibaba platform had created 102 million parcel orders.

Online retailers had a range of discounts Monday, with the Chinese version of Amazon offering reductions of as much as 90 percent. An LG 47-inch, 3-D television was going for 5,999 renminbi, billed as a reduction of 37 percent.

Amid the bargains, however, 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,” he said.

So successful has Singles’ Day been that it has already given rise to a sequel. Even as online retailers tally their receipts from 11/11, some of them are preparing for another manufactured e-commerce event: “Double-12,” on Dec. 12, when there will be more promotions.