Tomorrow, on 11.11, ‘Singles’ Day’ takes place in China, a special day in the country when consumers celebrate their single status. For single Chinese men and women, it undoubtedly will turn out a feast full of delight and flirt, yet for online retailers it will – if all goes according to plan – become the best day in the industry’s history. More than $8.2 billion is expected to exchange hands through online channels.
Singles' Day was initially celebrated at various Chinese universities during the 1990s. The day is celebrated on 11 November because the date consists of four ‘ones’, referring to the marital status of singles. The holiday was in the early years only celebrated by young men, hence it for long carried the name ‘Bachelors' Day’, but is since the start of the century widely celebrated by both genders. In recognition of the day, which is commonly considered as a local twist on Valentine’s Day, young singles organise parties and Karaoke to meet new friends or try their fortunes, as well as purchase gifts for their single friends.
For retailers, Singles’ Day has grown into the largest retail occasion of the globe. Last year, Chinese e-commerce platform Alibaba recorded sales of $5.7 billion on Singles’ Day, and total revenue for online retailers amounted to a massive $8.2 billion. That is, according to Jeff Walters, a Beijing-based partner with The Boston Consulting Group, more than twice the gross merchandise volume of all U.S. sales online during the post-Thanksgiving Black Friday and Cyber Monday sales.
New record expected
According to analyses from both KPMG and BCG, 2014 is expected to yet again break all e-commerce records. “China will soon overtake the US to become the world’s biggest online market,” says David McCorquodale, head of retail at KPMG in the UK. By 2020 the market will according to the Big 4’s estimates even be larger than those of the US, UK, Japan, Germany and France combined. The growing internet penetration* and acceptance to use the web for retail purposes are viewed as the main driving forces, backed by the growing wealth in the country. The potential has naturally not remained unnoticed in the retail industry – online retailers are marking the occasion by flooding the internet with promotions and fueling demand through tempting advertising campaigns.
Against the backdrop of both fundamentals, this years’ Singles’ Day is expected to be even bigger than ever before, with revenue forecasted to significantly surpass last year’s $8.2 billion, with some analysts even rumoring it will break through the $10 billion barrier. For many, however, the question is: where will the retail feast end? A recent survey from BCG shows that currently less than half of the Chinese population is online*, compared to for instance >80% in the major Western markets, implying that there still is a massive untapped potential. By the end of next year, China is forecasted to have as more online users than the US, Japan, India and Brazil combined.
Yet it does not necessarily mean that revenue will rise in line with the number of users, states BCG’s Walters. “While the number of shoppers will surely increase, the amount each one spends is likely to drop 15%, because promotions are becoming more common throughout the year, making Singles’ Day less special.”
For European retailers, China’s Singles Day may seem like a feat taking place at the other end of the globe, but none the less is true, says McCorquodale. Foreign brands selling goods to China are urged to get in on the action and raise their profile in the marketplace, “even if it means using third party sites like Tmall.” In addition, he expects Singles’ Day to spread beyond China, as Chinese owned companies expand overseas and introduce the promotion to new markets. “Tmall CEO Wang Yulei has also spoken of his determination to take Singles' Day global, and capitalise on the media attention garnered by Alibaba's IPO.” Vice versa, it may in his view also spark local initiatives, similar to the US-origin Black Friday, which has successfully spread beyond the borders of the United States.
* This has been reconfirmed by a recent McKinsey study; see the article ‘60 percent of global population still offline’ for more details.