Single's Day is the debut of China's "new retail"

China Plus Published: 2017-11-10 09:34:47
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By Roald Thomas Munoz

Singles' Day, also known as "Double 11" or "双十一," originated on Nanjing university campuses in the 1990's. Back then, it was a way for young bachelors to share their sorrows about being unable to find a girlfriend. Over time, both men and women have joined in the celebration of being single and upwardly mobile, and the accompanying phenomenon of sales specials and online shopping has grown at a staggering pace, driven mainly by the emerging global tech giant Alibaba and its mission to create "New Retail."

When I first came to China a few years ago, my checklist was as follows: register at my local police station, register my residence permit, and get an Alipay account. This act of creating my online payments account allowed me to delve into the world of online retail in China, with its endless deals, negotiations with sellers, and mixture of online-to-offline business models. It also has prompted me to look more deeply into why Singles' Day has become such a successful symbol for the "coming out" of China to the world stage.

Staff members of a cross-border e-commerce company check stock in Ningbo, east China's Zhejiang Province, Nov. 8, 2017. Cross-border e-commerce companies and courier services in Ningbo are busy preparing for the Singles' Day shopping spree which falls on Nov.11. [Photo: Xinhua]

Staff members of a cross-border e-commerce company check stock in Ningbo, east China's Zhejiang Province, Nov. 8, 2017. Cross-border e-commerce companies and courier services in Ningbo are busy preparing for the Singles' Day shopping spree which falls on Nov.11. [Photo: Xinhua]

In 2016, Alibaba garnered US $17.79 billion in sales on its biggest Singles' day ever, surpassing all other online retail records. In comparison, 2016 Cyber Monday in the USA reached just under US $3.5 billion in sales. For this year's 2017 Singles' Day four-hour gala fashion show, Alibaba secured Pharrell, Zhang Ziyi, US-born actor Vaness Wu, rapper VAVA, and other major influencers, showcasing its multifaceted global vision and reach.

The "See Now-Buy Now" event was broadcast on multiple media channels, including Youku, television, Weibo, Toutiao, and of course, the TMall and Taobao apps. Interactivity and AR/VR has grown as a major feature, with viewers able to direct the stage actions, collect prizes, and try "virtual dressing rooms." Tech innovations in 3D mapping were used to project images onto models on the runway. Brands ranging from major labels like Gap to smaller boutique designers were able to get immediate feedback from customers to better understand their interests and tastes. 

This level of interactivity, let alone national attention on a festival surrounding a sales event, is simply something that does not exist in my home country of the USA. This event should not be dismissed as a simple sales day -- rather, it is the debut of a new vision of what Alibaba's Jack Ma calls "New Retail," or the melding of consumption and entertainment.

In a shareholder's letter, Ma explained that the boundaries between online and offline retail are vanishing, and that Alibaba is pushing forward with a "Five New" strategy: New Retail, New Finance, New Manufacturing, New Technology, and New Energy.

Over the past year, I've observed how Alibaba has made inroads to small and medium-size business owners in the USA, giving them a new way to reach consumers across the globe in China. In a newly health and nutrition-conscious China, farmers and organic produce providers are also benefitting from the ability to reach a potential 500 million Chinese consumers.

China's logistics infrastructure has also been driven to innovate: in order to facilitate the expected surge in orders for 11/11, China's railway department has initiated a new express train "storage to storage" service, with the aim of cutting down the delivery time of goods from Beijing to Shanghai to under 10 hours. This service ties together the Fuxing bullet train, delivery companies, and e-retailers into a more comprehensive logistics system.

Alibaba's vision for the future of retail is to leverage its powerful ecosystem of services to shape not only China's e-commerce, consumption, and supply chain landscape, but the rest of the world's. In order to compete with the FANGs (Facebook, Amazon, Netflix, Google) and its BAT cohort (Baidu, Tencent), e-commerce must be combined with technology, finance, entertainment, and social media. For years, Alibaba has been seen as the "Amazon of China," yet its expertise now goes far beyond pure retail. 

According to Ma, "New Retail will bring about a restructuring of the global supply chain and the complexion of globalization from the domain of big companies to small business." This year's Singles' Day is not a culmination of Alibaba's efforts, but instead marks the beginning of a new chapter for the tech giant and China on the global stage.

(Roald Thomas Munoz is an industry research analyst at Guotai Junan Securities Co., Ltd.)

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