Retail in Asia

In Shops

5 reasons why Singles Day will become a US event

On Singles Day 2015, Alibaba handled an average of US$9.9 million every minute in a retail feat that racked up US$14.3 billion of Alipay payments, mostly on Tmall and Taobao Marketplace. That’s one and a half-million dollars of sales in the time it took to read this article’s first sentence. Impressed? It gets better. Last week, Alibaba pulled in US$17.4 billion on Singles Day, passing the one billion-dollar mark in just under five minutes.

Why this matters for US retailers

Singles’ Day went beyond China. On 11/11/2016, residents of 235 countries completed transactions, with more than 14,000 international brands taking part in the 2016 sale. Halfway into the event, those brands accounted for about 30 percent of total GMV. SEE ALSO: 7 differences between Singles Day and Black Friday Since inception, the Chinese holiday has since grown into a commercial powerhouse that towers over comparable Western shop-fests including Black Friday and Cyber Monday. Changing Chinese demographics and global logistics trends may transform Singles’ Day 2020 into a major milestone for US exporters and retailers. Here’s why:

1. Better Chinese logistics infrastructure

Over the next 5-8 years, Alibaba plans to pour US$16 billion dollars into improving the country’s infrastructure. Better last mile delivery, much like the US has enjoyed for decades, means better e-commerce fulfillment. Which, in turn, means more potential for international online sales to China.

2. Cheap shipping to China

Supply and demand on US-China exports, combined with historically low freight prices, means that shipping a 40-foot container from the Port of Long Beach to the Port of Shenzhen costs less than the price of a midrange MacBook.

3. Growing Chinese middle class

The size of China’s middle class surpassed the US’s middle class in 2015, and is now larger than the combined middle class population of Germany, Spain, UK and France. By 2022, McKinsey anticipates that a full 76% of Chinese nationals will be part of the middle class. And, at 410 million, the current number of Chinese shoppers that shop online is greater than the combined population of Canada and the US.

4. Singles’ Day vs Black Friday

Potential lost revenue from dipping sales growth and delayed profitability due to late shoppers — almost 60 percent of holiday shoppers will wait until November to begin holiday shopping — means that capitalising on Singles’ Day could be incredibly lucrative for US manufacturers.

5. Strong demand for American products

US sellers were already the second most represented seller demographic in Singles’ Day 2016, trailing only Japan and beating out South Korea. In may not happen in 2016 or 2017 … but by 2020, expect Singles’ Day to have become US retail sales’ holiday kickoff event.