E-Shopping Goes Over the Top

Before sunrise on November 11， Shi Hailin and his girlfriend sat waiting in front of their computer ready to grab bargain electronic appliances for their new apartment. When the shopping frenzy was over， they had spent more than 20，000 yuan （$3，280） and bought two air conditioners， a television， a refrigerator and a washing machine.

“The discounts offered by online stores are much more attractive. We saved 3，000 yuan（$492） at least by the online purchase that day，”said Shi， a 30-year-old state-owned enterprise employee in Beijing.

On November 11， selected as China’s premier online bargain shopping day and named Singles Day because of all the number 1’s in the date’s permutation， the country’s e-commerce giant Alibaba created yet another annual buying bonanza record. In the process its business-tocustomer （B2C） website Tmall and customerto-customer （C2C） website Taobao raked in a total of 35.02 billion yuan （$5.75 billion） via an unprecedented slashing of prices across a vast range of goods.

On Singles Day in 2012， Alibaba saw sales of 19.1 billion yuan （$3.13 billion）.

Over the past five years， besides Alibaba， a cluster of e-commerce companies like 360buy. com， the country’s second largest B2C website， suning.com， the online platform of China’s largest electrical appliance retailer， and amazon.cn， China operation of Amazon， have also joined forces in Singles Day online promotions.

New trends

Li Shengkai， a 40-year-old civil servant in Kaifeng， Henan Province， spent about 20 percent of her clothing budget on Singles Day.

“I was browsing on the Internet all the day with my smartphone， and spent roughly 1，000 yuan （$164）. Before the massive promotion， I went to shopping malls to try on the clothes I’d like to buy， and then bought them on Tmall. com at half price，” said Li.

Placing orders with smartphones has become a general trend since the popularization of the devices in 2010， said Wu Yongming， Vice President of Alibaba.

During this year’s Singles Day， the mobile phone app of Alipay， a third-party online payment platform of Alibaba， saw a transaction value of 5.35 billion yuan（$877.9 million） with 127 million active mobile phone users buying online， up 460 percent year on year.

On that day， B2C website 360buy.com also saw its transaction value exceed 10 billion yuan（$1.64 billion）， up 300 percent year on year， according to Lan Ye， its chief marketing officer. Among the 6.8 million orders， 1 million were placed via mobile phones.

The online-to-offline （O2O） system was also promoted on a large scale this year. Consumers select products in physical retail stores and place orders online. Such an interactive promotion system helped some e-commerce players achieve mega results. Take Suning for example. The home ap-pliance giant integrates its e-commerce platform with its 1，600 brick-and-mortar stores. Three days before November 11， a total of 6 million orders were placed and 10 billion orders were placed on Singles Day with a transaction value of 7 billion yuan （$1.15 billion）， equivalent to the sales of a quarter.

Online challenges

Jack Ma， founder and now Executive Chairman of Alibaba， expressed his willingness to turn Singles Day into a chance to reward consumers with high-quality and low-cost products. Yet， problems remain to be solved.

“I was waiting at the starting moment to secure some hot commodities， but it was almost impossible， since store owners only put a few products to offer，” said Shi.

The sales records of some online stores show that transactions are very dense on November 11. Cao Lei， Director of the China e-Business Research Center， believed that the promotion only created a slice of the sales in real terms.

“The sales in future months have been overshadowed by the crazy spending on Singles Day. It may take several months for durable consumer goods to restore demand，” Cao said.

Low prices spur impulsive consumption， which causes low brand loyalty. “Three days after purchases， refund requests flooded in. And some stores have seen their refund rates as high as 30 percent，” said Shi Zhongbo， President of Guangdong E-Commerce Promotion Association.

Some customers placed orders only for the sake of low prices without clearly identifying the functions and quality of the products they purchased. In such cases， refunds are inevitable.

Growth through impulse buying is how ecommerce professionals see the economic benefits brought by the online shopping carnival. “Aside from basic consumer goods， people are sensitive to quality as well as price，” said Mo Daiqing， an analyst from China E-business Research Center， who argued that consumers will become more and more rational toward promotions that fall under the pretext of price cutting.

“To achieve sustainable growth， domestic e-commerce players should not just count on low-price tactics， but also make efforts to improve user experience，” said Mo.

Spurring growth

Online shopping has evolved into a lifestyle in large cities. In Beijing， online retail sales topped 63.73 billion yuan （$10.46 billion） from January to September， exceeding that of department stores. Online sales contributed 40.2 percent in 18 consumer industries， according to statistics from the Beijing Municipal Commission of Commerce.

In the past three decades， China’s consumer market has been mainly dependent on the physical sales network. As the online transaction pattern takes shape， domestic demand has been substantially ignited. In 2012， online retail sales made up 6.2 percent of total retail sales of consumer goods， according to Shanghai-based iResearch Consulting Group， a leading organization focusing on in-depth research in China’s Internet industry.

In addition， small and medium-sized enterprises will benefit from the e-commerce expansion. According to statistics from Alibaba， its C2C website Taobao boasts 9 million online stores， and 3 million of them conduct active ecommerce business.

In terms of employment， the 9 million online stores alone will create hundreds of millions of jobs.

The Singles Day shopping carnival is not an e-business war， but a signal of economic transformation， the birth of a new economy， said Ma.