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| Source: AliExpress website. |
November 11, or simply "11.11", has become a special day for many Chinese consumers ever since Alibaba created this single-day online shopping festival in 2009. The total transaction value during last year's "11.11" reached US$5.73 billion, shocking Alibaba's e-commerce competitors around the world as well as the entire retail industry.
China e-commerce giant Alibaba has set US$8.18 billion as its 2014 target of single-day transaction value for the November 11 online shopping festival. IDC believes Alibaba is very likely to achieve 5% more. "11.11" is not only a festival for Alibaba, online shoppers, and online retailers; it also changes consumers' buying behaviour and impacts the evolution of the China e-commerce ecosystem, the research firm said.
The performance of "11.11" this year will be of great significance to Alibaba as a newly listed company and to the future of the China e-commerce market as a whole. A new sales record will definitely encourage Alibaba's investors and their business partners. Moreover, IDC believes that the business innovations supporting this festival are likely to point to future evolution trends in the China e-commerce market.
Even though the transaction value for last five years has witnessed a stunning growth rate, Alibaba's chairman, Jack Ma is still ambitious enough to raise Alibaba's "11.11" single-day sales target this year. IDC expects the final results to overachieve this target by 5% to US$8.65 billion.
IDC makes this forecast based on the reasons as below:
· Alibaba has systematical big data analytics capabilities and the experience to forecast sales numbers. What Ma makes public is a number that the company can comfortably achieve.
· For the first time ever this year, "11.11" will be a global online shopping festival. Alibaba has invited global suppliers from more than 20 countries to join this activity. Meanwhile, there will be 27,000 sellers in Tmall, the biggest group ever in the recent years. This does not include sellers in Taobao and other platforms.
· Collaborations with off-line retailers this year will facilitate many offline transactions through Alipay, which will increase the total transaction value. Cars, financial products, travelling services, and other types that were not traditionally common online, will be brought online this year. Therefore, IDC expects the average spending per consumer on "11.11" to grow by as much as 44% this year, and the final sales to reach RMB52.85 billion, which is 51% bigger than last year.
As more and more consumers become familiar with the "11.11" online shopping festival, it has gone beyond Alibaba. Other e-commerce players, including JD, Suning, No.1 Shop, and others, have launched their own marketing campaigns for this festival.
JD has paid great efforts on micro-shop promotion with strong support from Tencent QQ and WeChat. The promotion of shopping on credits with its financial service "JD IOU" will be another selling point. In addition, JD has issued millions of coupons and has offered deep discounts for "11.11" this year.
Suning's strategy focuses on its omni-channel shopping solution, providing seamless online and offline premium services. High quality with lower price is Suning's core advantage. No.1 Shop's strategy is more maverick as they are challenging the Guinness world record on sales by providing huge discounts.
IDC finds that price is still the key to attracting Chinese shoppers to the online sales festival, and believes that Alibaba's competitors' efforts will affect Alibaba's sales on "11.11" to some extent. However, Alibaba has the most comprehensive product range.
China e-commerce giant Alibaba has set US$8.18 billion as its 2014 target of single-day transaction value for the November 11 online shopping festival. IDC believes Alibaba is very likely to achieve 5% more. "11.11" is not only a festival for Alibaba, online shoppers, and online retailers; it also changes consumers' buying behaviour and impacts the evolution of the China e-commerce ecosystem, the research firm said.
The performance of "11.11" this year will be of great significance to Alibaba as a newly listed company and to the future of the China e-commerce market as a whole. A new sales record will definitely encourage Alibaba's investors and their business partners. Moreover, IDC believes that the business innovations supporting this festival are likely to point to future evolution trends in the China e-commerce market.
Even though the transaction value for last five years has witnessed a stunning growth rate, Alibaba's chairman, Jack Ma is still ambitious enough to raise Alibaba's "11.11" single-day sales target this year. IDC expects the final results to overachieve this target by 5% to US$8.65 billion.
IDC makes this forecast based on the reasons as below:
· Alibaba has systematical big data analytics capabilities and the experience to forecast sales numbers. What Ma makes public is a number that the company can comfortably achieve.
· IDC has made a rough estimation based on the growth of the amount of online shoppers and their average spending. According to IDC, the total amount of online shoppers has grown by 5.13% over last year.
Other factors that will drive the spending this year include:
Other factors that will drive the spending this year include:
· For the first time ever this year, "11.11" will be a global online shopping festival. Alibaba has invited global suppliers from more than 20 countries to join this activity. Meanwhile, there will be 27,000 sellers in Tmall, the biggest group ever in the recent years. This does not include sellers in Taobao and other platforms.
· Collaborations with off-line retailers this year will facilitate many offline transactions through Alipay, which will increase the total transaction value. Cars, financial products, travelling services, and other types that were not traditionally common online, will be brought online this year. Therefore, IDC expects the average spending per consumer on "11.11" to grow by as much as 44% this year, and the final sales to reach RMB52.85 billion, which is 51% bigger than last year.
As more and more consumers become familiar with the "11.11" online shopping festival, it has gone beyond Alibaba. Other e-commerce players, including JD, Suning, No.1 Shop, and others, have launched their own marketing campaigns for this festival.
JD has paid great efforts on micro-shop promotion with strong support from Tencent QQ and WeChat. The promotion of shopping on credits with its financial service "JD IOU" will be another selling point. In addition, JD has issued millions of coupons and has offered deep discounts for "11.11" this year.
Suning's strategy focuses on its omni-channel shopping solution, providing seamless online and offline premium services. High quality with lower price is Suning's core advantage. No.1 Shop's strategy is more maverick as they are challenging the Guinness world record on sales by providing huge discounts.
IDC finds that price is still the key to attracting Chinese shoppers to the online sales festival, and believes that Alibaba's competitors' efforts will affect Alibaba's sales on "11.11" to some extent. However, Alibaba has the most comprehensive product range.
The "11.11" online shopping festival influences the development of business infrastructure in China, including IT infrastructure, and logistics services. Alibaba is now moving on to build a wider e-commerce ecosystem all around the world. It is likely to create a new order for cross-border business in the future, which will definitely become a huge challenge to the American e-commerce giant, Amazon.
In the past, the "11.11" online shopping festival only happened in China. Now it will go beyond China to other parts of Asia and even to the world. According to Alibaba, shoppers from more than 220 countries can take part in this festival this year.
At the same time, Alibaba is also enhancing the capability of its ecosystem which includes cloud services, logistic services, and data analytics. It is noteworthy that each consumer will have his/her personal shopping web page during this festival, empowered by Alibaba's big data analytics.
IDC believes that mobility and online to offline (O2O), or the so-called omni-channel will be two important aspects of the changes in consumer behaviour. The "11.11" online shopping festival in 2013 achieved 45 million payment transactions through the Alipay mobile app, which counted for 24% of Alibaba's total payment transactions and 32% of its total transaction value oin 2013. The numbers are expected to be higher this year.
Meanwhile, as O2O shopping has become the norm for consumers, new O2O models will emerge during the "11.11" shopping festival this year. For example, consumers can go to offline shops to get the goods they purchased online. Also, consumers in offline shops can get coupons for future shopping by scanning the QR codes on the packing bags. Aside from that, memberships can be recognised in both online and offline shops.
At the same time, Alibaba is also enhancing the capability of its ecosystem which includes cloud services, logistic services, and data analytics. It is noteworthy that each consumer will have his/her personal shopping web page during this festival, empowered by Alibaba's big data analytics.
IDC believes that mobility and online to offline (O2O), or the so-called omni-channel will be two important aspects of the changes in consumer behaviour. The "11.11" online shopping festival in 2013 achieved 45 million payment transactions through the Alipay mobile app, which counted for 24% of Alibaba's total payment transactions and 32% of its total transaction value oin 2013. The numbers are expected to be higher this year.
Meanwhile, as O2O shopping has become the norm for consumers, new O2O models will emerge during the "11.11" shopping festival this year. For example, consumers can go to offline shops to get the goods they purchased online. Also, consumers in offline shops can get coupons for future shopping by scanning the QR codes on the packing bags. Aside from that, memberships can be recognised in both online and offline shops.
One challenge for Alibaba will be in mobile commerce. One of its main competitors, Tencent (Wechat) occupies the dominant position in social networking and mobile instant messaging in China.
Read the blog post about Tencent's mobile commerce achievements here.
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