Home > Asia Weekly
Friday, December 18, 2015, 10:48

Online retail hits the right keys

By Cornelia Zou
Online retail hits the right keys

Delivery riders sort through boxes of goods at a roadside distribution point in Beijing on Nov 16. Courier services were kept busy delivering items bought during Singles Day on Nov 11, the world’s biggest online shopping spree. (AFP)

While the prospects for retail markets in Asia are fluctuating wildly, e-commerce is on a hot streak at the expense of traditional retail.

Busier than ever, online retailers and operators of online shopping events are seeing sales skyrocket as incomes rise, the Internet penetrates deeper into new areas across Asia and distribution networks become more efficient.

Now a well-cemented part of the mainstream retail environment, the advent of e-commerce has been particularly visible this holiday season. Online shopping events such as China’s massive Singles Day, also known as Double 11 or 11.11 (as it is held every year on Nov 11), are eating up more of shoppers’ disposable income and Christmas shopping budgets.

Noting that Christmas follows closely after Singles Day, Matthew Crabbe, research director for Asia Pacific at market research firm Mintel, said: “I wonder if that event takes some of the spending impetus out of any Christmas promotions, as everyone has done their big shopping spree on 11.11, and probably won’t be ready for the next one until Chinese New Year.”

Online retailers have vastly expanded their offerings over the past few years, from simple goods to a comprehensive range of fresh food, agricultural products, and services, and put more emphasis on promoting e-shops.

Traditional special occasions such as Christmas combine with relatively new shopping-only events such as Singles Day and Double 12, or 12.12 (held annually on Dec 12), to give shoppers around Asia new reasons to reach into their — mostly digital — wallets and splurge some of their newfound wealth.

The losers are traditional retailers that have to invest heavily in bricks-and-mortar outlets, which are now experiencing less foot traffic. This is particularly true of luxury retailers. Consultancy Bain & Company expects China’s luxury market to dip between 2 and 4 percent this year.

“In a world dictated by price points, brand power and innovations like loyalty card schemes have become secondary,” noted The Economist Intelligence Unit in a recent retail report.

“This has forced retailers to implement sales as a means of drumming up interest, excitement and footfall around their products, pushing down profit margins and pressuring supply chains in the process.”

In about half a decade in China alone, Singles Day has evolved into one of the largest shopping events in the world. Its creator, Chinese web giant Alibaba, is among the biggest winners.

“The Alibaba Group has taken more than 90 percent of the Double 11 sales in the past few years. This year it should account for about 80 to 85 percent. So when you look at Double 11, you look at Alibaba,” Yolanda Zhang, a research manager at market intelligence firm IDC, told China Daily Asia Weekly.

“Other retailers haven’t paid enough attention to Singles Day in the past, but now they’re paying more attention to increase their revenue and compete in the market.”

Launched in 2009, Alibaba’s Tmall 11.11 online shopping bonanza led to sales of $3 billion in 2012, which almost doubled to $5.6 billion in 2013 and jumped again to $9.1 billion in 2014. This year, sales skyrocketed to an astonishing $14.3 billion, a leap of 60 percent from last year.

To put this in context, a similar online shopping day in the United States, Cyber Monday, generated $1.35 billion in sales this year, according to data analytics firm comScore. Meanwhile, sales during Black Friday, held the day after Thanksgiving in the US, added up to $1.66 billion in 2014, according to data portal Statista. Both are well-established pre-Christmas shopping events.

Latest News