Single's Day shopping triggers e-commerce, traditional retail battle
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E-mail Xinhua, November 18, 2012
Wang Ling grew excited when she received her yellow coat by courier on Friday, after she tried it on in a department store but bought it online with a 50-percent discount.
The 28-year-old shopper in Hangzhou, capital of east China's Zhejiang Province, had jotted down the details of the coat in the real store in advance, fully prepared for a major 24-hour half-price promotion that began on November 11.8 The shopping bonanza, initiated in the name of "Single's Day," was organized by e-commerce giant Alibaba Group, operator of Taobao.com and Tmall.com.
Alibaba achieved a sales volume of 19.1 billion yuan (3.04 billion U.S. dollars) during the 24 hours, three times more than when it ran the promotion last year.
The boom has set e-commerce and traditional retail against each other in a new type commercial battle.
CUT AND THRUST
"I did feel a bit awkward when the salesperson stared at me after I tried many things but bought nothing. But I was happy when I got the coat," Wang said.
She is not alone in exploiting the deal and in cheekily taking to the high street first. Customers swarmed to department stores to try clothes only to buy them later on business-to-customer websites. These people picked up the name "number copying clan."
The clan is not new this year, having been bred by cheaper online purchasing, but its membership witnessed a sharp uptake right before this year's Single's Day.
To deal with the situation, many large high-street shops held their own large-scale marketing on Nov. 11 in Beijing, Hangzhou and other cities. Some consumers in northeast China's Liaoning Province and central China's Hubei Province found items were protected by retailers to prevent the clan from deploying its usual tactics.
"With time limited to 24 hours, the number of consumers and the whole purchasing capability is relatively fixed, which leads e-commerce companies and traditional retailers into this cut and thrust," said Zhang Tianbing, a partner in Deloitte Touche Tohmatsu Limited, one of the world's "Big Four" professional services firms.
E-commerce giants likewise emphasized the comparison between the two categories of sellers. According to Alibaba, 6.4 billion yuan was taken by 5,000 Shanghai outlets of 395 companies during the seven-day National Day holiday this year, and that amount was topped by Alibaba's sales volume within half a day on Nov. 11.
While Alibaba dominated headlines with sales of 19.1 billion yuan in the 24 hours, other e-commerce companies also launched marketing plans around the same time. Three million orders were taken during a three-day burst of promotions on Suning.com from Nov. 9 to 11. Dangdang.com received orders worth 20 million yuan on Single's Day.
MARKET SHARE
However, even the e-commerce giants have to admit that not all goods are suitable for online purchasing.
"Some commodities need to be touched or felt. People need to decide after experience," admitted Zhang Yong, president of Tmall.com. "Take sofas, for example. No matter how detailed the pictures are, the sense of touch can not be replaced."
But e-commerce companies are still trying to stretch into selling such products.
May 2011 saw the opening in Beijing of a market designed to let shoppers view items which they would then buy online. The 25,000-square-meter pavilion was the brain wave of Beijing Ifengchao Technology Ltd Company. Each of its 270 rooms was occupied by a company which had an online store on Tmall.com. Self-service machines in the market helped buyers orders online.
The market doubled its area in a new location one year later.
Single's Day is considered a landmark dividing the old age of traditional retail and the new age of e-commerce, according to Yang Bin, president of Analysys International Solution.
China's two leading electrical equipment suppliers Gome and Suning started a war in 2005, which culminated in the two achieving a combined sales volume of 100 million yuan in a single day in Nanjing, capital of east China's Jiangsu Province, Yang said.
"Seven years later, the shopping carnival has shifted from offline to online, with trade volume climbing 200 times," the analyst added.
Nevertheless, debates still exist in the two industries as to what extent e-commerce can replace traditional retail.
According to documents released by China's State Council in July, 9 percent of all Chinese retail will be done online by the end of the country's 12th Five-year Plan (2011-2015). The number stood at only 5 percent at the end of 2011.
"How can online shopping replace real stores while online sales take less than 10 percent of the whole electrical equipment market?" questioned economist Ma Guangyuan, on his microblog.
Different sides agree on one point: the foundation for e-commerce to suddenly explode still exists, which will continue to drive e-commerce to gain more shares in the whole retail market, especially in third-tier and fourth-tier cities.
According to Alibaba, its sales rose 98 percent in central and western China in the first six months of 2012, exceeding its growth in eastern areas.
NOT ONLY RIVALS
"E-commerce will not only be complementary to traditional retail, but it will become the mainstream in China," predicted Ma Yun, board chairman of Alibaba Group.
Traditional retail is highly developed in America, but Wal-Mart Stores Inc spent 20 years to cover the Unites States. China, however, will not wait another 20 years, he reasoned.
Consuming potential also can be stimulated by marketing measures and scale effects in big cities with advanced traditional retail, according to Gu Jun, professor of Shanghai University's sociology department.
Indeed, the need to stimulate domestic demand to expand the domestic market was emphasized in the report of the 18th National Congress of the Communist Party of China, which closed on Thursday.
"Online purchase is not only a rival of traditional retail, but also a counterpart. It can makes the whole cake bigger," said Guo Tianyong, director of China's banking research center at the Central University of Finance Economics.
"The rise of e-commerce will also lead to a new round of reshuffling in traditional retail," Guo forecast.
The view is echoed by Li Bin, vice president of Suning.com. During the company's recent three-day promotional burst, its online and offline market stimulated each other with the same discounts, which saved a large amount in marketing fees for the company and accomplished three million orders, Li said.
All the 50,000 employees of Suning joined the "battle," which guaranteed service during the "explosion," he added.
Amid the optimism, some doubt the potential of domestic demand. "It was exactly because of the lack of purchasing power that the discounts become more attractive and made the marketing succeed," Deloitte's Zhang Tianbing said.
"It's still too early to give a conclusion on e-commerce's influence on traditional retail. But one thing is sure: there will be a big impact on traditional retail," said Liu Jie, professor of Fudan University's school of management. Endi
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