Singles' Day (11.11)

China may hold the future of retailing as Singles’ Day marries online and offline stores

This year’s over US$25 billion shopping extravaganza is being seen as a litmus text for how traditional retailers can operate in the age of e-commerce

PUBLISHED : Sunday, 12 November, 2017, 6:04pm
UPDATED : Monday, 13 November, 2017, 12:03pm

When online giant Amazon bought grocery chain Whole Foods Market for US$13.7 billion in August, the move was described as a harbinger of disruption for America’s traditional retailing landscape.

But the future of global retailing may have been on view on November 11 in China, where businesses led by Alibaba Group Holding stage-managed what has become the world’s biggest online shopping event: Singles’ Day, and which this year some analysts saw as a litmus test of the way forward: the integration of online and offline stores.

Sharing centre-stage at this year’s Singles’ Day were hundreds of thousands of actual high-street stores, linked to the internet and powered by computer algorithms, big data and cloud computing, offering shoppers a seamless shopping experience that is further blurring the lines between online and offline retail.

Connecting actual shops to the internet is Alibaba’s latest strategy, and that of its e-commerce counterparts, to transform China’s 4 trillion yuan (US$603.2 billion), old-school retail market. The country is already the world’s largest online shopping market.

The idea is to form partnerships between shops and actual bricks-and-mortar premises to hook consumers into massive e-commerce ecosystems, giving them expanded data and insight into products before they buy – a comprehensive consumer experience to further boost online orders, said Andria Cheng, an analyst with eMarketer Retail.

Pascal Martin, a partner with OC&C Strategy Consultants, added that “China is perfectly positioned to leapfrog every other market with the emergence and growth of online/offline working innovatively in unison.

“The Chinese digital environment is now dominated by the deepening integration of online players such as Alibaba, who have the ability to control all the components of an online shopping experience, from browsing to payment to delivery logistics. Even Amazon doesn’t enjoy this level of integration,” said Martin.

He added that the potential of China’s digital retail industry is huge, as the country has 900 million smartphone users.

Alibaba said that this year more than 1,000 brands had converted 100 times that many physical locations into “smart stores”, featuring a range of new retail experiences, from cloud-shelves – big screens allowing outlet customers to browse and buy items that are not sold in stores – to virtual fitting rooms, facial recognition technology-enabled payments, to online in-store order and pickup.

At Hong Kong airport, travellers who liked items they saw on Alibaba’s pop-up stores there could immediately place orders online, while in Shanghai, shopping centre fans could win coupons by playing a virtual reality game introduced by Alibaba, offering chunky discounts.

Since October last year, Alibaba has elevated this so-called new retail – a concept driven by the integration of online, offline, logistics and data across a single value chain – to the top of its development agenda.

As well as teaming up with department store and supermarket chain operators such as Intime and Lianhua, it has enlisted half a million family-owned stores across the country into its offline expansion drive.

“Online commerce players are slowly starting to realise the rich benefits of tying in with offline retailers, both in the US and China,” said Adam Xu, a partner with PwC’s Strategy& consulting arm.

“As fast as online retailing grows, pure-play e-commerce companies have woken up to the reality that a bricks-and-mortar strategy only aids their online growth. Customers are not just live online,” he added.

While companies such as Alibaba have already won over many of the country’s increasingly affluent young, and not so young, shoppers to online platforms, to maintain their growth they are now having to increase their offline footprints to encourage customers to reopen their wallets in actual stores.

Alibaba smashes Singles’ Day record as online shopping festival goes global

After Singles’ Day was created by Alibaba in 2009, a raft of other sites from to VipShop Holdings have jumped aboard the annual extravaganza. This year, one-off and unbeatable online bargains ran into their thousands, and Alibaba alone raked in 168 billion yuan (US$25.3 billion) in sales in just 24 hours, up from 120.7 billion yuan last year, and eclipsing both US online shopping equivalents, Black Friday and Cyber Monday.

“This year was the ninth Singles’ Day. But in this increasingly intense ‘e-commerce war’, the regular routine of ‘lower prices’ isn’t now enough to snare consumers,” said Tommy Hong, vice-president of Nielsen China.

“With spending power increasing, consumers are starting to pay more and more attention to experience and service, and these new modes of integration between online and offline channels will help bring that about.”

According to a Nielsen survey, 44 per cent of consumers said they planned to take part in offline shopping events during this year’s Singles’ Day.

Among those, 69 per cent said shopping offline helps them “better judge the quality of products”.

Some observers see this as pointing to the start of a comeback by the traditional retail industry.

Alibaba is the owner of the South China Morning Post.