Guest Column: Black Friday vs. Singles Day in China



This month, two major retail events take place in China, the biggest retail market in the world: Black Friday and Singles Day. 

Both of these events matter because they profoundly influence global retail trends as well as U.S. retail strategy. In recent years, a growing number of American retailers and brands have paid close attention to China because this large market is increasingly lucrative as Chinese consumers grow in affluence. Rising wealth has sparked a consumption upgrade, as Chinese consumers now buy more premium quality products from across the globe through cross-border e-commerce. Products “Made in the USA” are in demand, as Chinese consumers seek the quality and prestige of American goods.

Singles Day sales extravaganza goes global 
China’s annual Singles Day is the biggest retail event in the world. Established by Chinese e-commerce giant Alibaba, Singles Day takes place annually on Nov. 11. In 2018, Singles Day shattered sales records by generating $45 billion in sales – more than seven times as much as global online sales for Black Friday. 

This year, American singer Taylor Swift will headline the event, proving Singles Day has evolved to earn international awareness and appeal. Swift is the most high-profile act featured at Alibaba’s annual shopping event since its inception more than a decade ago.

In terms of strategic considerations for retail companies, Singles Day is popular for general e-commerce, and American retailers and brands can face strong competition with Chinese brands on platforms such as Tmall and JD. Traffic acquisition costs are more expensive for Singles Day offerings, and the amount of ad space companies can bid for remains limited. In addition, retail companies face intense pressure to entice Chinese shoppers with deep discounts, as Alibaba allocates website space to companies on its main e-commerce webpages according to the attractiveness of their deals. Popular product categories among Singles Day include beauty and cosmetics and apparel.

Why U.S. retail companies bet big on Black Friday
In comparison, Alibaba has turned Black Friday into an online sales event for discounts on U.S. and foreign goods shipped to China using a special customs clearance to minimize regulatory constraints. Popular product categories on Black Friday include cruelty-free cosmetics, quality milk powder, health supplements and protein powder, and organic foods. 

Last year on Black Friday, Alibaba rival JD.com reported that online shoppers in China actively searched for such items as protein powder, facial masks and diet products, as well as specific American nutrition and diet brands like GNC and SlimFast.

In general, Black Friday customers tend to be females in China’s affluent Tier 1 cities between the ages of 25 and 35. Many of these shoppers are furnishing their first homes and starting families, hence their propensity to invest in categories like furniture and appliances.

Notably, American retailers and brands face less competition for traffic and attention on Black Friday. As such, companies seeking a higher ROI often focus their efforts on Black Friday rather than Singles Day, as the competition for traffic and attention is lower.

To maximize their success on Black Friday, retailers and brands should negotiate for promotion space on China’s leading e-commerce platforms. The companies should also proactively prepare their supply chain operations and IT infrastructure to ensure they can handle large surges in orders with agility and efficiency.

Conquering the China retail market
American retailers and brands looking to enter the large, lucrative China market often use online marketplaces like Alibaba’s Tmall or JD.com’s JD Worldwide. However, these online marketplaces are highly competitive, crowded and costly. As a result, more foreign retailers and brands are turning to stand out and sell online in China using their own dedicated Chinese websites. They collaborate with local Chinese retail experts to gain greater control over their marketing, and reduce risk and costs.

For U.S. retailers and brands looking to grow through foreign expansion, the China retail market can be a good fit, especially for companies that sell products in in-demand categories. Selling in China in time for the Singles Day and Black Friday sales events can help American companies capitalize on their popularity, quality and prestige as Chinese consumers grow in affluence.

Franklin Chu is U.S. managing director for Azoya International.




Source link