Slowing Singles Day growth in China a sign of stiffer competition, says OC&C

Chinese shopping bonanza Singles Day has again smashed sales records this year but at slower growth. Still, there were some notable features of this year’s event.

While registering another record haul, China’s Singles Day this year witnessed slowing growth. But a dampened local economy and unfolding trade war aren’t the only explanations according to OC&C Strategy Consultants partner Pascal Martin, as Alibaba’s signature sale faces growing competition from other promotional events and e-commerce entrants offering year-round super-low prices. 

Marking its ten-year anniversary, Chinese online retail giant Alibaba’s 24-hour Singles Day event for 2018 pulled in more than US$30 billion worth of sales (or Gross Merchandise Volume) – up from just over $25 billion last year and more than doubling the 2015 figure of $14.3 billion. Still, despite growth of 27 percent, the rate has slowed from last year’s 39 percent and the 60 percent recorded in 2015.

A slowing Chinese economy and evolving China/US trade war likely contributed to the more cautious Chinese consumer sentiment, but Pascal Martin of OC&C Strategy Consultants in Hong Kong believes there may be several other factors at play – such as increased competition from similar big sales events and low-price e-commerce challengers, as well as waning general public interest.

Speaking with CNBC, Martin contended that more so than broader economic factors, competing promotional events such as Alibaba rival JD.com’s annual 6.18 sale, which this year generated over $25 billion in online and offline sales across 18 days in June (up 40 percent on 2017), were beginning to have an impact. “Singles Day used to be the one and only event in China, but remember it’s been going on for ten years now,” Martin said in an interview.Indeed, Martin states his belief that “the consumer is holding strong” but simply has more choices, with the experienced retail sector consultant further citing the local rise of events surrounding the western Valentine’s Day, Christmas and New Years, along with the Chinese New Year celebrations. In addition, the Chinese consumer has more options as to where they can shop, including the super-low-cost ecommerce site Pinduoduo.

“Alibaba with the Singles Day event was really very powerful with the prices and discounts they were offering,” said Martin. “But you have new platform Pinduoduo, which has been able to assemble 350 million customers in just three years, and they are providing the market with some prices that are absolutely impossible to beat. And so I think the Singles Day event is just facing more competition from other events and specialist sites.”

Evolving event

Still, in a further discussion with retail-focused media site InsideRetail, Martin highlight three notable features of this year’s Singles Day, namely; Alibaba’s New Retail ecosystem, which melds online and offline channels – “For example, Tmall’s 3000+ convenience stores, Hema and RT Mart supermarkets, Suning and Auchan, were all part of the event. Altogether 200,000 brick and mortar stores joined the party”; globalisation, with for example Alibaba owned Southeast Asian site Lazarda taking part in the event, and; diversification, such as with event sales moving beyond just consumer goods to include products such as videos, music, tickets and travel.

Martin adds that Singles Day will also have to continue evolving and expand the scope of the event to maintain its momentum; “11.11 (the date of Singles Day) has become much more than a commercial fair, it is now a major annual milestone in China’s cultural calendar. To keep the event fresh and exciting, Alibaba will need to continue to surprise Chinese consumers with entertainment and festivals around the event. This year, the double 11 gala event featured Miranda Kerr, Mariah Carey and Cirque Du Soleil, but no current big stars. Is this enough to continue to excite consumers, particularly younger generations?”

Recently, OC&C bolstered its Consumer practice ranks with the addition of local retail and consumer expert Adam Xu as a Partner based in Shanghai.