Heads Up! Black Friday Is Coming To China
摘要： Without a doubt, Tmall had achieved great success on the Double Eleven shopping festival. But the situation for Tmall is a little awkward since this time international brands were also on the platform and they had a low sales performance.
This year Tmall’s volume of trade was a tremendous record-breaking success as the number soared to over 91.2 billion RMB within one day. The twist this year was international brands’ participation, which is part of Tmall’s internationalization plan. However, their sales performance has never been released to the public.
Indeed, the Double Eleven Shopping Festival has gained an immense traction and it has become a commonly celebrated shopping festival on other platforms such as JD and Sunning as well than merely a Tmall specialty. This year, however, is a year of changes. Cross-border e-commerce platform Ymatou.com avoided the Double Eleven Festival and went straight to join the Black Friday in overseas markets.
The Black Friday is unofficially or officially the start of holiday shopping season and it’s the day after Thanksgiving. Almost all stores come out with doorbuster sales with early bird special to attract consumers to their stores. People stand in line hours before store is opened, to grab the bargain of the year. Almost every store has something that interests every one. For bargain hunters, if there is a biggest festival in a year, that would be, no doubt, the Black Friday. This very shopping festival started earliest as in 1961 and it has a history of 54 years already. The Double Eleven Festival is more or less just like the Black Friday but only celebrated mainly on e-commerce platforms and in China. Since the beginning of this century, the Black Friday is closely connected to discounts and promotional sales. It later swept through Europe and Australia as well. Starting from the Black Friday to January 1st, basically a whole month, most stores could get probably one third of the total annual sales and one second of the total annual profit.
Under these circumstances, Ymatou.com, which is dedicated to providing it consumers with overseas products, paid all the attention to the Black Friday. Ymatou.com together with 20,000 product purchases and thousands of business onwers provided consumers with four hundred thousand items from the department stores, supermarkets, and gift shops etc. Aside from that, Ymatou.com’s logistic team also had the priority right of many airlines and was able to send products from overseas markets to China fast.
Just like Zeng Bibo, CEO of Ymatou.com, said: International brands have easy access to Tmall’s platform, but it’s hard for them to actually enter the market since the most popular items are still those of previous bestsellers and the information asymmetry between consumers and brands is still pretty serious. Ymatou turned to the Black Friday in hopes of creating its own shopping festival for overseas products.
So what are the differences?
Although the Double Eleven Festival and Black Friday are similar on the surface, there are still differences.
The Double Eleven Festival is led by Tmall and it later transformed from a promotion campaign to an online national shopping festival for the country. Besides Tmall, most e-commerce platforms also participate in this grand festival. In comparison, Black Friday takes places mainly offline, brick and motor stores. By far, Black Friday already has a history of 54 years and it has entered online platforms as well. But still, physical stores are the main battlefields. When shoppers are shopping at physical stores, they can show the discount information they found online to the clerk and enjoy the same discounts there. Additionally, brick and motor stores actually have special discounts that can only be used in physical stores.
The color of black actually means something in the business world as red usually represents loss while black means profit. And it happens that many stores are able to turn the tide on Black Friday while the rest of year they have red numbers on their account book. That’s how Black Friday got its name.
In comparison, the Double Eleven Festival was brought by Alibaba to stimulate sales by giving massive discounts. Every year, the trade volume on the Double Eleven Festival is sky high and it’s continuing to grow at an unimaginable speed. But to get a high trade volume, business owners are forced to lower their price and participate in this national online event. Some business owners will even put on products of lower quality on their shops in order to make more profit, which ultimately leads to a high return rate.
Without a doubt, Tmall had achieved great success on the Double Eleven shopping festival this year. But the situation for Tmall is a little awkward since this time international brands were also on the platform and they had a low sales performance. The most popular items were still sold out within minutes just like previous years. It’s just too difficult to strike a balance between sales and discounts. And of course, the main cause for this situation lies in the information asymmetry between consumers and brands. International brands’ sales performance simply just doesn't meet the expected goal.
Black Friday is quite the opposite case. Statistics show that between 2009 and 2012, the average of 31 major department stores and fashion brand outlets across the America jumped from 25% off to 36% off. However, the retailers still have a 27.9% rate of margin on average.
To be honest, a major difference here is that on Black Friday you might be able to buy things at a cheaper price while on the Double Eleven Festival you might get items at cheaper price and with lower quality. International big brands’ products are more expensive and of good quality, and they have a more complicated return of goods policy. This difference is actually one of the incentives for shoppers who are buying things from overseas. This is the fundamental difference between the Double Eleven Festival and Black Friday.
Why Black Friday hasn’t gained much attention in China?
Many people don’t even know about Black Friday since it’s pretty much an foreign things and they haven’t participated in that before. When my relative bought a suitcase at the price of 900 RMB I was amazed for the fact that the same suitcase would cost 2400 RMB in China. I also find it astonishing that children clothes that are around a couple dollars to twenty dollars also have good quality.
The price and quality gap causes Chinese consumers to look for alternatives overseas. But since not all consumers have the time and opportunities to go overseas just for shopping and they don’t want to bother their relatives or friends in foreign countries either, Black Friday is far from their reach.
Although foreign e-commerce platforms as well as Chinese giants are catering to consumers’ needs, there are little options for consumers to buy on Black Friday. For instance, last year Amazon only made a couple tens of thousand of items available to Chinese consumers. The limited number of good, unpredictable international logistics service and the no return policy just totally kill Chinese consumers’ passion.
Although there are lots of cross-border e-commerce players in the country, still the most popular items are predictable such as milk powder, diapers, and health care products. Products that are popular overseas are not well-known in China and therefore they have a poor sales performance. But the overly focused shopping targets also led to a wave of fake products since the supply just couldn’t meet the demand, which further damaged the cross-border e-commerce industry.
This year, Ymatou made an all-in decision to bring Black Friday to China. Ymatou.com teamed up with 20,000 product purchase agents and thousands of business onwers to provide consumers with four hundred thousand items including clothes, accessories, electronic gadgets etc. from the department stores, supermarkets, and gift shops etc.
Additionally, Ymatou’s own logistics team xLobo had over 40 planes at its disposal and could deliver goods to China in five days. After arriving in China, goods could be delivered to the hands of consumers within two days. In other words consumers could get their packages mostly in a week, which is much faster than its rivals who usually took more than two weeks.
As logistics service and return policy grow mature, the long-brewed cross-border e-commerce is near the point of booming. The main drive of this tendency is the price gap and the assurance of product quality.
But still, is it really a good thing for Chinese consumers to buy massive overseas products?
The upgrade of consuming habits could lead to the upgrade the industry structure
In November, statistics from the central government show that in October the total volume of social retail goods had a year-on-year growth of 10% while that of the overseas consuming jumped by 30%. In the situation where the growth of domestic demand is starting to slow down, many people naturally dislike overseas shopping and turn to support Chinese products.
But clearly government officials saw it differently and an executive meeting was called to make a detail plan about the situation. Importing overseas products has been regarded as an opportunity of upgrading the industry structures.
It’s been proposed in the executive meeting that the country should import more popular goods for everyday consumption, set up more duty free shops at customs, and improve the tax refund policy for outbound tourists in order to make it more convenient for consumers to have access to overseas products.
On the other hand, foreign products are more popular than domestic products for the fact that the consuming capacity in China outpaces the speed of the upgrade of Chinese products.
Backed by the country’s policies, cross-border e-commerce platforms such as Ymatou and Tmall HK etc. can focus more on improving logistics service, quality assurance, and the matter of information symmetry and be better prepared for the coming new era of e-commerce. Chinese consumers will therefore enjoy Black Friday as convenient like they shop on the Double Eleven Festival on Chinese platforms.
From this perspective, even though Ymatou’s attempt has no chance of competing with the Double Eleven Festival in terms of volume, it’s still considered as a game-changer in the cross-border e-commerce sector for importing and spreading the idea of Black Friday to China.
[The article is published and edited with authorization from the author @Jugelizi, please note source and hyperlink when reproduce.]
Translated by Garrett Lee (Senior Translator at ECHO), working for TMTpost.