november 2, 2015 singles’ day preview · deborah(weinswig,(executive(director!...

1 DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.

November 2, 2015 • This year, Alibaba’s Singles’ Day strategy includes introducing more foreign

products into China and developing the promotion into an omni-‐channel shopping event.

• JD.com has teamed up with Tencent for mobile commerce and is targeting Alibaba’s weaker logistics in its advertising.

• GOME Electrical Appliances is offering heavy discounts to lure shoppers, while Suning Appliance continues to differentiate with an online-‐to-‐offline (O2O) strategy.

With $9.3 billion in sales in one day in 2014, Alibaba’s Singles’ Day (November 11) has turned into the world’s largest online promotional event. Since 2009, Singles’ Day sales have exploded at a compound annual growth rate (CAGR) of 292.4%, which dwarfs the 23.3% CAGR of Cyber Monday sales in the US. This year, Alibaba looks to make the shopping extravaganza even bigger by introducing more international brands and taking the sale to brick-‐and-‐mortar retailers.

Alibaba’s Singles’ Day Sales vs. US Cyber Monday Sales

Source: Bloomberg/comScore/FBIC Global Retail & Technology

Going International Alibaba Chairman Jack Ma announced on October 13 that the company aims to boost its sales of overseas products. According to Ma, China’s growing middle class provides ample demand for international brands and, this year, Alibaba expects more than 5,000 foreign brands to participate in Singles’ Day.

0.01 0.14

0.82

3.06

5.75

9.30

0.89 1.03 1.25 1.46

2.29 2.60

0.00

2.00

4.00

6.00

8.00

10.00

2009 2010 2011 2012 2013 2014

$ Billion

Singles Day Cyber Monday

Singles’ Day Sales CAGR: 292.4% Cyber Monday Sales CAGR: 23.9%

SINGLES’ DAY PREVIEW


The Omni-‐Channel Sales Day Alibaba is expected to fluidly integrate its mobile and O2O capabilities to provide a better 2015 Singles’ Day shopping experience. Sales via mobile accounted for 32% of all sales in 2013 and 42.6% in 2014. This year, mobile is expected to account for over 50% of Singles’ Day sales.

In the US, we have seen some online retailers open physical stores and, in China, Alibaba has been laying the groundwork for this trend by investing in Suning, Intime Retail and Haier Electronics, which are all established brick-‐and-‐mortar retailers. This year, Alibaba’s investments in these companies should bear fruit, allowing it to connect with shoppers across channels.

Alibaba has said that, besides Suning, Intime and Haier, over 1,000 other brands and retailers—operating 180,000 points of sale in 330 cities across China—will also participate in Singles’ Day this year. Retailers with brick-‐and-‐mortar footprints are participating in the event in several ways:

• Many retailers’ involvement started with offering discount coupons through the Taobao mobile app; customers receive the coupons whenever they shop at any of the companies’ retail locations. Alibaba estimates that over $7 billion worth of coupons will be redeemed on Singles’ Day this year.

• The brick-‐and-‐mortar locations will also serve as distribution centers and collection points for orders made online, which will significantly decrease fulfillment time and cost. In some cases, customers will be able to get products delivered in less than two hours from the time of purchase.

• Starting on November 1, Suning, Intime and Haier, along with many other retailers, will set up experiential zones inside their stores. The areas will feature products that customers can buy online with a discount on November 11 if they scan the printed barcodes on the items in-‐store.

This large number of plugged-‐in retail locations and their activity across channels should create a truly integrated O2O experience for consumers this Singles’ Day.

Deals Many Chinese retailers have already started promoting their Singles’ Day sales. We found the following bargains online:

• Sanyo WF810626BICS0S 8kg Washing Machine: ¥1,998, 67% off from Tmall

• Gree KFR-‐26GW Air Conditioner: ¥2,549, 34% off from Tmall

• L’Oréal Paris White Perfect Set: ¥269, 50% off from JD.com

• PPTV Television 55P 55'' 4K Wi-‐fi LED: ¥2,799, 22% off from Suning

• Haier 205L Fridge BCD-‐205STPH: ¥1,399, 26% off from GOME


Market Reactions

Suning, which is part owned by Alibaba, claimed that its prices will be 20% lower than JD.com’s this year. The company has

also launched a One Dollar Sale and advertised that it will offer more than ¥2 billion in “red envelopes.” Customers can receive these bonus yuan by adding value to their Suning mobile payment app accounts. Suning is also fully joining the omni-‐channel trend, but going one step further: the retailer will be offering after-‐sales services for digital products and mobile phones purchased on Tmall, regardless of the product model or brand.

JD.com is Alibaba’s closest competitor. However, it has long been a distant second as an e-‐commerce platform. Tencent, the owner of WeChat, and JD.com formed a strategic alliance that

allows WeChat users to shop directly on JD.com via the app’s shopping channel. This is attracting mobile traffic and challenging Alibaba’s online dominance.

In anticipation of Singles’ Day 2015, JD.com has been sharing online coupons and discounts for different items to lure shoppers since October 19. Also, it has been specifically targeting Alibaba in its advertising, highlighting Alibaba’s poor logistics service. Logistics is one of JD.com’s competitive edges, as it has over 100,000 employees and an expansive logistics network.

GOME’s goal is to overtake its rivals, including Suning and JD.com. On October 23, it began offering big sales on items ranging from home appliances to car care products, with discounts as much as 70% off.

Our Expectations

It will be interesting to see if this year’s Singles’ Day breaks another sales record, given the backdrop of a shaky market and looming economic softening in China. We expect that it will. Armed with more foreign brands and an integrated brick-‐and-‐mortar network, we think the event will break the $9.3 billion sales figure by a margin. Keep following our coverage to see it as it happens.


Deborah Weinswig, CPA Executive Director—Head of Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: 852.6119.1779 [email protected] Filippo Battaini [email protected]

Marie Driscoll, CFA [email protected]

John Harmon, CFA [email protected]

Aragorn Ho [email protected]

John Mercer [email protected]

Shoshana Pollack [email protected]

Kiril Popov [email protected]

Jing Wang [email protected]

Steven Winnick [email protected]

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november 2, 2015 singles’ day preview · deborah(weinswig,(executive(director!...

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