A Chinese record in global ecommerce …

by bold-lichterman

Alibaba just closed on November 11, 2016 in China, an event that is simply incredible in terms of its scale: in one day – the famous celebration of “Double 11” (also commonly called Single Day or even Shopping Festival), the Chinese e-commerce giant completed head-turning volumes on its Tmall, TaoBao and AliExpress marketplaces: more than $ 17 billion in online orders, more than 657 million orders… Simply astounding!

This year, Alibaba was keen to achieve a big blow by launching a big show aimed at a global audience to launch “its” day of sales, this famous Double11 launched in 2009. On the menu, presentation of more or less futuristic or even cutting-edge technologies e-commerce with a lot of robotics and mixed virtual reality; worldwide media coverage with more than 600 journalists from all countries invited to this Global Festival which took place in Shenzhen – the “industrial capital” of Chinese e-commerce: the presence of the founder Jack Ma and the CEO Daniel Zhang and to finish a plethora stars who would not mismatch a ceremony worthy of Hollywood… In the end, the media success was also there…

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The media coverage has been unprecedented on social networks (whether Western like Twitter, Facebook or Linkedin but also of course on Wechat, the Chinese network). And the scale of the show on site impressed. Designed to entertain a raging audience for over 4 hours in an American SuperBowl style, The stars paraded to promote the event on stage pushing a galvanized audience who – by simply shaking their phones – could access a multitude of exceptional discounts for “immediate and live” purchases. Kobe Bryant, Scarlett Johansson, the Beckham couple, Alibaba have aligned an international “people” elite to successfully launch what – just a few years ago – was still a trade fair ignored in the West and built from scratch to develop sales on its Chinese marketplaces… Such a success this year that even the last-minute defection of Katy Perry, who was to launch the party with a concert, went completely unnoticed and did not affect the success of the event…

On the brand side, there are more than 11,000 foreign brands associated with the event, including this year for the first time brands like Apple – cited as one of the big winners of the day by Alibaba (see illustration below), Sephora, Victoria’s Secret or more surprisingly, Maserati. But let’s not forget that China is also the country with the largest number of millionaires in the world …

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De facto the success is such that this year, even competitors like JD.com – Alibaba’s Chinese rival – joined the party to try to get out of the game, tweeting loudly about its own performances during this exceptional day.

Among the highlights of this day, let us first note the 82% of the total turnover achieved… through mobile orders. Any discerning observer of the Chinese market knows that, in particular with WeChat, the Chinese have totally and definitively switched their digital universe around their mobile. But the observed figure will undoubtedly leave the big players in European ecommerce stunned.

At peak consumption, Alipay, the group’s payment platform, for its part recorded a peak of 120,000 paid transactions per second. While Alibaba recorded a load of 175,000 orders placed per second. In the end, more than 657 million orders were therefore placed on the group’s sites. A volume which, according to Jack Ma himself, will test the limits of logistics capacity in China …

Now behind these figures which make you dizzy, a few comments and questions on an event that wants to establish itself as the world benchmark of the genre and supplant the great American masses in the sector.

First of all, this growth is above all an indicator of the success of consumption in China. We regret that it is not intended to take on a more strongly international dimension. Indeed even if the Chinese group’s portals are accessible abroad, in particular for a marketplace like Aliexpress, it is clear that this remains above all a Chinese record for the Chinese market …

If the event was covered in the media beyond anything we know in the e-commerce sector (Black Friday and Cyber ​​Monday included). It must be recognized that by inviting the media and doing the show, Alibaba has done everything for this.

On the sales side, the result is there: overall sales have grown compared to 2015 by 24% in US dollars (32% if we consider the local currency, the RMB). And the international market has had its share since we are talking about a growth of 47% year on year in sales and that they represent a total of 27% of the global amount …

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If the figures are dizzying, we must also see that little information allows to know precisely at what level this amount of sales will be really confirmed … This year the international president of Alibaba has promised: these figures will be audited by a firm of advice. This will be interesting to follow because it will make it possible to measure beyond the gross figure, how many of these packages have actually been delivered and what the return rate will be – out of a colossal number of often impulse purchases …

An amount which will undoubtedly be high for certain categories of products as the share of “fictitious purchases” is a big tradition among certain Chinese merchants to boost their visibility by moving up in the ranking of sellers those who bring them increased visibility on market places markets where competition abounds

Then – and there it is the European ecommerce side which speaks – we will regret that the event remains centralized on the promotion of the industry in China… It is thus a little difficult to federate the general international public in a larger way on the subject.

As for international sellers, the big brands are of course joining the party with their great financial resources. 37% of Singles’ Day shoppers purchased products from an international brand. And we can clearly see in the ranking published above that the big brands were at the party.

But no particular facility is made on this occasion to allow producers, manufacturers and local merchants in the world to join this fair more simply … De facto it was necessary to follow the classic process of integration – complex and quite expensive – and to be either physically present with a subsidiary in China to be on Tmall, or go through a local service provider process (TmallPartner) to go to the “international” version of Tmall Global. The global site is the Hong Kong edition of Tmaill but only has access to a very large audience but significantly limited compared to the parent marketplace …

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Finally, AliExpress remains an international market place with the wind in its sails but exclusively reserved for Chinese producers. Its site available in more than 17 languages ​​- offers a choice of more than 100 million SKUs (product references) deliverable in more than 243 countries and regions and its mobile application is very popular in certain countries such as for example Russia which is one of the main markets of Aliexpress. We are therefore impatiently awaiting the day when Alibaba decides to open it to producers around the world.

As for TaoBao, a sort of Chinese-style eBay, it has recently made it possible, thanks to a global offer, to allow international producers / manufacturers to sell to intermediaries who will then resell via this marketplace to end users. However, the initiative is too recent to still have a noticeable effect on the European market.

With this 2016 edition of the Shopping Festival, Alibaba definitively anchors this trade fair as a major global event. Driven by an ever-growing Chinese consumer market, it demonstrates the dynamics of e-commerce in China. At the very most, we can regret that the much-announced opening of the Chinese giant to the world market is taking a long time … Opening to customers of course but also to the economic framework of ecommerce.

For the moment Alibaba remains in line with its historical direction, Jack Ma wishing above all to privilege the development of the offer in China. To compete completely with Amazon at the global level, Alibaba will have to demonstrate that it knows how to open up to other markets as well… This is another story and we will have to wait to see the first initiatives… With an important stake for Europe. The recent American elections, and the arrival in government of Donald Trump will reshuffle the cards in the e-commerce market. If the latter carries out his electoral program, the establishment of protectionist barriers via import taxes for ecommerce will undoubtedly have an impact that will reduce the windfall effect of the American market. Suddenly, legitimately the entire Chinese e-commerce will then take an even more serious look at what constitutes the second largest world market in terms of volume: Europe. And think of it as something more than just a tag tank… A case to be continued.

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Nenad Cetkovic is Lengow’s COO.

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