Singles’ Day began on Chinese university campuses in the mid-1990s as a counterpoint to Valentine’s Day for couples. Now 11.11, four 1s as the date is written, is a US$30 billion global shopping event, bigger than last year’s record-breaking US$7.9 billion Cyber Monday online shopping day in the US. How can online retailers cash in on the global shopping festival when it hits?
Singles’ Day was popularised in 2009 by an executive named Daniel Zhang who used the date to promote Tmall, Alibaba’s virtual mall for brands, with just 27 merchants participating. 11.11 was aimed to publicise online shopping and encourage sales in the quiet period between Golden Week in China and Christmas. It’s certainly delivered on those objectives and continues to grow each
Consumers spent US$1 billion on Alibaba platforms in the first one minute and 25 seconds of last year’s event, and racked up US$30.8 billion in spending by the event’s close, an increase of 27 per cent in 2017. That is more than the Annual GDP of Uganda or Estonia. This makes 11.11 the world’s biggest retail event, three times larger than Cyber Monday 2018, which at US$7.9 billion was a new US record for online sales in a single day.
11.11 is becoming increasingly popular outside China. Customers from around the world can shop on Alibaba Group websites and retailers worldwide are jumping on the 11.11 bandwagon by offering promotions on their own websites to coincide with the event.
In fact, retailers such as Adidas, Apple, Dyson, Estée Lauder, Gap, Kindle, L’Oréal, Nestlé and Nike were among the 237 brands that exceeded RMB100 million (US$14.4 million) in sales during the 2018 event.
How Retailers Can Cash In
As 11.11 becomes more global, payment is going the other way. It’s becoming more local, especially across APAC and beginning to Europe. This stands to reason that there is no single global way to pay. PPRO saw online transactions using certain local payment methods increase 2-2.5 times during 11.11 in 2018 across of variety of merchants and industries compared to the same period in 2017.
A lot of these were bank transfer payment methods, which account for around half of all online payments in Austria, Germany, and Poland, up to 70 per cent in the Netherlands, but also very popular in Malaysia, Indonesia, and Thailand.
With only 40 per cent of online payments in Europe and less in APAC, made with a plastic card, retailers must accept that they will miss out on sales unless they can localise payments. Retailers need to be acutely aware of how their customers, and potential customers, prefer to pay and make sure that all of them are in good working order in the run-up to 11.11.
The dilemma for retailers is that customising and simplifying payment choices for customers often creates complexity behind the scenes. This is usually in back-end systems and the processes needed to collect, reconcile, and refund multiple payment types.
Getting paid is a crucial part of business, but it’s not a retailer’s core business. So they need to consider how much time, effort and budget they want to invest in localising payment.
The solution to the dilemma is simple; Outsourcing back-end payment operations allows retailers to focus on the front-end engagement with customers, where they can add value and create a competitive advantage. This means developing smart partnerships for local payment expertise.
Tristan Chiappini is the VP, Head of Partnerships Asia, PPRO
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