As the United States was celebrating Veterans Day over the weekend, there was a spending frenzy lasting 24 hours for the online shoppers in China. This shopping festival is called Singles’ Day or Double 11 and happens every year. The shopping extravaganza began ten years ago and is very similar to Amazon Prime Day. What most Americans do not know is during the last ten years, this event has become a lot bigger and more global than the yearly sale offered by Amazon.
The Singles’ Day festival brought in an astounding $30.8 billion or 213.5 billion yuan this year from China’s shopping platforms, Tmall and Toabao. To put this figure in perspective, this was seven times more than the four billion Amazon brought in during their Prime Day this year. This also exceeded the $19.6 billion spent by American consumers last year between Black Friday and Cyber Monday.
The substantial gap between Amazon and China regarding their yearly sales events is another reminder of the massive population of China is impacting everything from eCommerce to cloud commerce. Amazon is missing an important market opportunity. Despite the success Amazon has had in the United States and some of the overseas markets, they are still struggling to assert their presence in many countries including China.
Amazon currently owns less than two percent of the online retail market in China. This fraction is negligible in comparison to the 47 percent owned by Alibaba and JD.com’s 20 percent. These figures were compiled in 2017 by Business Insider Intelligence. When actual demographics are used for the translation, this means these two eCommerce giants have approximately one billion more customers than Amazon.
There are numerous reasons behind the incompetence of Amazon. By the time Amazon entered China, they were already late in the eCommerce industry. Alibaba was found in 1998 by Jack Ma. The China website was not launched by Amazon until 2004. In addition to this, the Prime membership is the flagship product of Amazon. This was not even available in China until 2016.
By the time the Amazon Prime membership was available in China, the battle had been lost. Their rivals were already able to surpass the average savings offered by the free shipping program provided by Amazon. The cost of Amazon’s Prime membership in China is $41 dollars a year or $11 for ninety days. The majority of items on JD.com and Alibaba charge a $1 or $2 shipping fee for their two-day delivery. Both sites also offer free shipping for numerous promotions without requiring a subscription.
The Amazon Prime membership in China does not include Prime Video because of the strict censorship rules of the Chinese government. This weakens the appeal even more for the consumers. Alibaba has continued to expand outside of China including throughout the United States. This is in spite of the trade barriers between the United States and China.
According to the data for Alibaba regarding China’s Singles’ Day, American shoppers and retailers contributed to the sales figure of $30.8 billion. The shopping extravaganza featured in excess of 10,000 American brands including Foot Locker. Tmall’s deputy general manager is Wei Chen. He stated the United States merchants were doing well overall regarding their debut this year as opposed to last year. He also stated global customers have a feast at China’s Singles’ Day. The Chinese consumers are demanding more and more overseas goods. This is the reason for the participation of so many global merchants.
The globalization also went in another direction as well. According to data from Alibaba, only twelve minutes after the start of Singles’ Day orders were placed on Tmall from more than 200 countries. According to the Global Times newspaper, the buyers from the United States were responsible for a lot of these sales. One buyer from the United States spent $17,000 or 120,000 yuan at the online store for the National Museum of China to purchase a vase.
by: Dennis Hung