International brands in China and the Double 11

The British Boxing Day and the American Black Friday were considered are the stars of the e-commerce sales events worldwide but it seems China stole the limelight from the western countries when it comes to e-commerce the biggest sales of an e-commerce with the “Double 11”, the annual Chinese online shopping festival.

Within the very first twenty minutes of November 11^th this year, Chinese online buyers had already bought for an amount of 1 billion dollars’ worth of goods.  The Chinese online shopping festival may only have started a few years ago but already shows an impressive retail organization that is breaking e-commerce sales records each year.

The event is also a proof that Chinese millennials’ opinions are decisive when it comes to the next trends of the e-commerce market. Mobile was another force driving the sales this year with 46% of Alibaba’s transactions going through mobile. Western brands are willing to share the profits generated by the Double 11 and are adjusting their strategies to this event. Here is what they need to understand to have successful sales on the 11^th of November next year.

Breaking Global Sales Records

The “Double 11” online shopping festival in China has the largest amount of sales worldwide. The Alibaba group already announced the amount of sales their sites reached this year:  more than 9 billion dollars were spent for the 24h that lasted the festival. This amount is a 63% increase in the sales compared to 2013. So that, the Double 11 is setting and breaking the global sales records. Despite its size, the Chinese event is however unknown in most western countries.

Alibaba rules the whole event

The shopping festival originates from the celebration of the Single’s Day which takes place on 11 November. On this special date young and single Chinese are throwing events to meet new people, in the hope of meeting their future partner. In 2009, Alibaba started to offer huge discounts on the same day on its platforms Taobao and Tmall which is why the even has now become so popular among the young Chinese. In 2014, Alibaba‘s sales should hit 420 billion dollars which places the group within the leaders positions of online retail worldwide. The Group is breaking records even when it comes to its IPO at the New York stock exchange in September this year. The IPO indeed reached 168 billion dollars, and was the sign that the group was ready to launch its international strategy.

This is also why Tmall has signed a lot of partnerships with global brands. Chinese consumers can now buy foreign brands directly on Tmall, such as Costco and Tesla Motors who set up their stores on the platform earlier this year. Tesla adapted its strategy of retail for the Double 11 event and started to sell its Model S on Tmall platform from October 20. The cars however sold really easily and even went out of stock before the 11^th of November.

Alibaba’s most aggressive competitor on this market is the American group Amazon who chose to launch their new website on the Double 11’s date. Thus allowing Chinese online shoppers to buy genuine American products from US brands. The American e-commerce giant also allowed its Chinese costumers to have access to reviews of the products made by American and a 3 to 10 days delivery service.

The reasons of Double 11’s Success

Sales via mobile reached 42.6% on this year’s festival. Shopping via mobile has become even more convenient than through the computer. Chinese who are enjoying a 90% mobile penetration in their country are therefore changing their way of shopping from e-commerce to m-commerce. M-commerce is perfect for rural regions of China who do not have stable wired connections.

Online shopping in China is also becoming more and more social, with online retailers partnering with social networks. JD.com, launched the “social shopping” trend  via  its partnership with the Tencent group which owns WeChat and QQ. Online shoppers can now easily go from one platform to another.

Double 11 has been created by young and single Chinese for young and single Chinese. The event is therefore driven by China’s younger generation, the millennials. There are 485 million of them, and according to GWI 69% of these millennials already made at least one online purchase. If brands want to know the future trends of the e-commerce market, they should therefore pay attention to the mobile technologies and social platforms innovations and more importantly follow the trends that appeal to millennials.

Double 11 sales are driven by Chinese brands

Chinese brands know the local local market better than any foreign brand.  They are moreover used to the prices war of the Chinese market and are not afraid to offer really significant discounts on the Double 11 festival.  This explains why the top 10 brands by sales on TMall this year were Chinese. The smartphones manufacturer Xiaomi was at the top rank.

Double 11 aims beyond China

Online shopping festival such as the Double 11 will emerge in all major markets and regions of the world. Brands need to develop strategies in order to be prepared to gain market shares on those kinds of events.

Alibaba’s success into creating the Double 11 online shopping festival in China is too impressive for foreign retailers to ignore. This is why brands will have to take part in such kind of events.

To go further:

Branding strategy in China

How to better understand the Chinese e-commerce market ?

Advertising your e-commerce website in China

iResearch’s data on the Chinese e-commerce market