E-commerce platform Tmall once again smashed the single day sales record on 11 November 2017 – better known as ‘Singles Day’ or the ‘Chinese Black Friday’. Sales this year exceeded USD 25 billion in just one day, almost a 40% increase over the previous record of USD 18 billion set in 2016. And it wasn’t just Tmall. JD.com, the second largest e-commerce platform, had a gross merchandise volume (GMV) of over USD 19 billion for the first eleven days of November.
So what does this mean for foreign companies looking to sell to China’s massive consumer base? First, let’s take a look at some key statistics from the largest sales day in the world.
The top 10 selling brands on Tmall were either large Chinese brands or high profile foreign brands. Xiaomi, the privately owned Chinese smartphone maker, was the number one brand sold, while other Chinese technology and appliance brands such as Haier and Midea also made the top 10. Foreign brands included Nike, UNIQLO, Sharp and Adidas – mostly on the fashion side.
One of the most interesting statistics about Singles Day 2017 was that 90% of purchases were made on mobile phones, further emphasising the domination of so-called ‘m-commerce’.
Another key statistic is where the purchases were made. The top provinces/administrative regions for purchases on Tmall were: Shanghai, Beijing, Guangdong, Zhejiang, Fujian, Jiangsu, Shandong, Sichuan, Hubei, and Henan. The top cities for sales were: Shanghai, Beijing, Hangzhou (Zhejiang), Shenzhen, Guangzhou (both in Guangdong), Chengdu (Sichuan), Wuhan (Hubei), Chongqing, Suzhou and Nanjing (both in Jiangsu).
These figures don’t come as too much of a surprise because China’s income distribution and middle-class are concentrated in the coastal areas and in the tier 1 and 2 cities. However analysis of this information is especially important for any companies considering any online or offline entry or growth strategy.
So, what is the best way for a foreign company to approach the market and capitalise on one of the world’s largest consumer bases? The answer will, of course, depend on a number of different factors but we can at least draw a few general conclusions:
• Online brand and category demand: it is relatively cost efficient to conduct market research focusing on China’s online market. Due to the sales volume, it is a great proxy for the overall China market and the data is extremely accurate.
• Offline market research: based on the online sales analysis, a company can then decide if there is sufficient demand to warrant researching the offline market in respect of locations for offline stores and marketing.
• Strategy development: online sales analysis can be used to determine if the brand should pursue a purely online strategy or an integrated online-offline strategy. From there, partner selection and support would be the next step.
If you are interested in increasing your understanding of the China market and the potential opportunities for your brand, online or offline, please contact Mark Ray at Sovereign’s Shanghai office.