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Jun
2015

The ‘Double 11’ phenomenon and e-commerce growth

On August 19th more evidence of the massive growth in e-commerce in China, if it were needed was released by the China Electronic Commerce Research Centre showing that online retail market transactions during the first half of the year reached 754.2 Billion RMB, an increase of 47.3%. It expects that by the end of 2013, the national online shopping transaction value will reach 1.7412 Trillion RMB.

The ‘Double 11’ phenomenon

‘Double11’ refers to the 11th November each year, which is also known as ‘Singles day’ because of the four consecutive one’s. It began as a campus culture in universities some years ago and spread on internet, after Taobao.com used the story as a promotion vehicle and created a new sales record in 2009. As a result, ‘Double11’ became the biggest online shopping carnival for all online shoppers in China, not only for Taobao, but other e-commerce website like Jingdong and Yixun that all joined in. The concept has also spread to some shopping malls that offer special discounts on that day.

The question still has to be asked why e-commerce chose the ‘Double11’ day, as there would seem to be times other more important than the 11th November such as the period between Christmas and Chinese New Year which is always a promotion vacuum period for offline stores.

Sales figures

Five years on since the first ‘Double 11’ promotion, there is almost a Spring Festival atmosphere about it and it has become one of the most anticipated events of the year for most online consumers.

During 2013 ‘Double11’ day, sales volumes on all e-commerce sites increased significantly, an 1870% increase on Tmall (the Taobao B2C site) compared to an ordinary day, 870% increase on JD.com, and a 615% increase on Suning.com.

Take Tmall as an example, at 00:10 11th November, 10 minutes after the promotion activity started, the sales values reached 1.5 Billion RMB; 5 Billion RMB worth products sold in 38 minutes; 13 hours into the day the figure reached 19.1 Billion RMB which was the sales value of 2012. Finally after 24 hours the number stopped at 35.018 Billion RMB, almost twice the figure of last year. Undoubtedly Tmall was the overall winner, creating a new sales record.

Consumption value in Tmall on 11th Nov by province

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Tmall ‘Double11’ rules

How does ‘Double 11’ day work on Tmall?

  • It guarantees that all the products sold in the store will be 50% off the original price on this day
  • The price that day must be lower than 90% of the lowest deal price offered for the same product from 15th September to 10th November
  • In addition to several special areas and brands, all participants should implement a free shipping policy
  • For 30 days after the ‘Double11’ (12th November – 11th December), the price of any product originally offered cannot be less than the price on the ‘Double11’ day.

Those stores that meet the requirements still need to be audited by Tmall after submitting an application to participate.

69016cb5jw1eagyc5s3hnj20m81fz7jzIt wasn’t all clothing and bags

On 11th Nov, Ms. Huang from Zhejiang province purchased a 13.33 Carat rough diamond for 20.5 Million RMB online. The diamond is from the Zocai flagship Tmall store that is not a well-known brand in China. It is reported that the lady is pregnant and her husband paid the huge sum to reward her for carrying his child as well as to create an heirloom to be passed on.

“Ms Huang is a diamond amateur and a royal customer of Zocai. She liked the diamond and hesitated for a long time. Over a period of weeks we had communicated with her and finalised the deal on the morning of the 11th. She prepaid a 5 Million RMB deposit online and will pay the balance after she receives the diamond as a piece of custom-made jewellery.” Wu Tao, the General Manager of Zocai said “We named the 13.33 Carat diamond ‘The Plough’ after the star formation, it is the highest quality being colorless, flawless and cut to 3EX. The recommended retail price is about 50 Million RMB, so 20.5 Million RMB is even less than half price.”

Cars also sold

Online car stores also provide a variety of promotional activities during ‘Double 11’, including reducing the cash price and giving fuel cards. More than 9,000 vehicles were sold.

Consumers prepaid 200-500 RMB deposit online then visited the specific 4S store to finish the purchase process. Because the prices and discount were confirmed online, there was no bargaining issue in the store. So in this case the 4S store is still the sales channel and the sale online is actually a promotion activity.

Fund companies become the new kids on the e-commerce block

On 31st October, Taobao was authorized by the CSRC (China Securities Regulatory Commission) and became the only third-party fund e-commerce platform in China. 17 well-known investment fund companies took advantage of the ‘Double11’ activities and these included the Guotai Fund, Great Wall Fund, GF Fund and and ICBC Fund.

During its first time showing in the ‘Double11’ promotion, the sales value of the 17 stores reached 908 Million RMB, the largest of which achieved with a sales value of 531 Million RMB. 5,495 consumers spent over 50,000 RMB each and one investor from Shanghai purchased 1.5 Million RMB worth of shares in a wealth management fund.


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