Alibaba and JD.com, China's two e-commerce giants, both reported record sales during this year's Singles Day online shopping bonanza, with exploding sales of international brands playing a big role.
China's gradually recovering economy and strong consumption potential had attracted many international brands to join the shopping festival this year. Over 31,000 foreign brands from 84 countries participated in Alibaba's Singles Day, which is 1.4 times the number of foreign brands participating last year.
High-end luxury brands such as Cartier, Prada, and Valentino signed up for Singles Day for the first time, providing exclusive gifts and free installment payment plans for their customers. Light luxury brands Coach and Michael Kors offered more promotion schemes, such as limited-time discounts, pre-order discounts, and coupons.
Ms Zeng is not alone among Chinese consumers. Many of them are willing to buy foreign goods, especially luxury goods when traveling abroad.
"This year's Singles Day undertook the biggest online demand outbreak after the epidemic," said Li Zhan, chief economist with Zhongshan Securities. "The travel restrictions caused by the epidemic have prevented many Chinese from going abroad, so they are shifting their consumption online."
The excellent performance did not let foreign brands down. From November 1 to 11 at noon, Tmall International, Alibaba's e-commerce platform, reported a 47.3 percent increase in the turnover of imported goods compared to the same timeframe last year. Among them, 180 overseas brands traded over 10 million yuan (US$ 1.52 million), and 816 overseas brands traded over 1 million yuan (US$ 0.15 million).
Among foreign brands, the performance of luxury brands was remarkable. In previous years, luxury brands were reluctant to participate in Singles Day promotions because they believed such "down to earth" promotions would lower the level of their brands. However, the global epidemic and the uncertainty of the world economy caused the performance of luxury brands to decline so much that they had to embrace Singles Day and launch various promotion schemes.
This year, more than 200 luxury brands participated in the Singles Day promotion, twice as many as last year, and they also saw a surge in sales. JD.com officially kicked off its Singles Day Grand Promotion on November 1, with its luxury goods saw whole day sales on that day up 138 per cent year on year. In the first 30 minutes, 127 brands including Prada, Ferragamo, Ralph, and Tod’s saw sales up 10 times compared to the same timeframe last year.
Bags, clothes, shoes and jewelry have become the most popular luxury goods for consumers. In the first 30 minutes, compared with the same period last year, sales of luxury bags, clothing, shoes and jewelry increased 625 per cent, 458 per cent, 463 per cent and 851 per cent, respectively.
"This is a win-win situation," said Zhu Wenhui, financial commentator of Phoenix TV. "Chinese consumers have bought luxury goods at desired prices, while luxury brands can seize the opportunity to use China's strong performance to reverse the decline in western markets.”
With Chinese consumers’ high buying enthusiasm, Alibaba reported a total gross merchandise value (GMV) of 498.2 billion yuan (US$ 74.1 billion) from November 1 to 11, marking an increase of 26 per cent compared to the same timeframe last year. Meanwhile, JD.com recorded 271.5 billion yuan (US$ 40.9 billion) of transaction volume over the same period, which represents a 33 per cent increase.
It is worth mentioning that behind the record breaking sales of Alibaba, in addition to the help of international brands, there was also an extended duration of the shopping festival.
Alibaba's platform extended the pre-sale period this year in order to ease logistics pressure and better sell. The deposit could be paid from November 1, and balance payment would be paid on November 11. Moreover, another promotion period was be set from November 1 to 3, with the discount same as that on Singles Day.
In this way, Alibaba achieved two sales peaks -- November 1 to 3 and November 11. In fact, 498.2 billion yuan (US$ 74.1 billion) was the sum of transactions in these two periods, of which 126.6 billion yuan (US$ 17.6 billion) was recorded from November 1 to 3, and 371.6 billion yuan (US$ 56.5 billion) was recorded on November 11.
Although Alibaba and JD.com broke new records in sales on Singles Day, they suffered "discount" share prices along with their goods.
Both e-retailers dropped around 8 per cent in Hong Kong on November 11, coming after the Chinese regulators released draft guidelines to rein in antitrust behavior in Internet businesses such as e-commerce, triggering uncertainty.
Investors worried that if the antitrust guideline draft did take effect, Internet platforms would face too many restrictions, which would affect their development prospects.
“In the short term, antitrust rules may cause volatility in related companies' stock prices,” said Dr. Billy Mak, associate professor from Hong Kong Baptist University School of Business. “But in the long run, the epidemic has accelerated the digitization of the retail industry, which is an unstoppable trend with great potential for development.”