E-commerce giant Alibaba predicts it will hit US$21b in sales. Photo / 123RF
Singles' Day, China's annual online shopping festival, starts today and for many retailers it means one thing - billions of dollars in sales.
The retail event, which gets underway at midnight in China (5am New Zealand time), encourages those who are single to treat themselves. The sale is gaining momentum Down Under but this is nothing compared to the bonanza in China.
Chris Wilkinson, managing director of First Retail Group, says Singles' Day has become a "religion" overseas, with e-commerce companies such as Alibaba and Tmall enlisting celebrities and pop culture icons to drive the hype.
Singles' Day, or 11.11, started as an obscure "anti-Valentine's" celebration for single people in China in the 1990s, established by university students in Nanjing.
Since then it has turned into the world's biggest online shopping day, surpassing the commercial success of Black Friday and Cyber Monday, which often causes pandemonium in the US.
E-commerce giant Alibaba made US$17 billion ($24.5b) in sales in just 24 hours from Singles' Day last year, and predicts it will hit US$21b this year.
On Black Friday last year online sales totalled more than US$3b.
The average discount on Singles' Day in China last year was 33 per cent, but many sites advertise discounts of 50 or 60 per cent, and coupons can be purchased to bag an additional discount.
New Zealand price comparison website PriceSpy has predicted electronics, gadgets and gaming products will be the biggest sellers on Singles' Day in New Zealand.
Last year it found mobile phones, TVs, game consoles and headphones to be the most popular purchases on the day, with PB Technologies, Noel Leeming, Auckland's Mobile Station and Expert Infotech being rated the most popular stores.
Greg Harford, general manager of public affairs for Retail NZ, says Singles' Day had the potential to build into a significant event in New Zealand.
"A good example to look at is Black Friday, the US shopping frenzy towards the end of November, coupled with Cyber Monday. Those have slowly gathered steam in New Zealand. Consumers have started looking out for those sales, and retailers have responded to the competition that is available internationally by starting to roll out similar sales," he says.
"Over time Singles' Day will become more significant in the Kiwi shopping calendar."
A number of New Zealand businesses selling products through Chinese website Tmall have had success on Singles' Day in the past - particularly those in the beauty, health and wellness categories.
"Some of New Zealand's best-known brands have been quietly doing very well, however, few tend to shout loudly about it," Wilkinson says. "Spa treatments, food and beverage businesses also do well as the event brings people out to socialise."
NZX-listed skincare brand Trilogy is hosting its very first online Singles' Day promotion this weekend, offering discounts across its New Zealand, Australia and China e-commerce platforms.
Trilogy digital and social specialist Kristina Andreassen says the company is excited about the potential rise in sales.
"Trilogy has experienced substantial growth in the Chinese market and after recognising how critical this online event is to that market and our locally-based Chinese consumers, we felt it was important to get involved and celebrate these types of events with this audience," Andreassen says.
Rival brand Antipodes is also getting in on the e-commerce action.
The company began preparing for Singles' Day in July, and is already planning for next year.
It has made a number of videos and teamed up with Chinese influncer Allison Zhu who livestreamed its products - receiving nearly two million views - and has seen a spike in its Tmall flagship store pre-sales.
"11.11 is huge for us, and China is one of our biggest markets," says Antipodes digital marketing specialist Katrina McClelland. "This is our third Singles' Day ... it's doubled every single time, and we're expecting it to triple this year."
While the official online shopping frenzy starts November 11, most e-commerce sites host warm-up and pre-sale events ahead of time.
Over time Singles Day will become more significant in the Kiwi shopping calendar.
"The reason why they do that is because two years ago when Tmall hit go at midnight all of the servers went down - we're talking millions of people going on the site at the same time, so now they do warm up sales and pre-sales - you can pre-order for the day, they had to," McClelland says.
Antipodes' entry into the Chinese market was not all smooth sailing, as it is not permitted to sell its products in bricks and mortar stores.
"We cannot sell our products in China in bricks and mortar stores without testing on animals, and one of our ethos is we would never test on animals, so we had no choice [but] to go e-commerce," she says.
"In hindsight it has been great for us because a high percentage of Chinese shop online on their phones through Tmall. We do cross border parcel to parcel, either from Hong Kong or New Zealand, that was the only way we could tap into the market."
Eco-friendly household and personal care products company Ecostore has also reaped the rewards from Singles' Day in the three years it has been involved.
"We've seen year on year growth of over 100 per cent on sales and we're expecting that again this year," says Ecostore managing director Pablo Kraus.
"We see Singles' Day as a huge opportunity to build brand awareness, and we see our base sales go up over the rest of the year because of it."
Last year, within 20 minutes Ecostore had exceeded its sales from the previous year and within 10 minutes had sold out of its fabric softener and laundry liquid.
Last year Alibaba held a glitzy four-hour long countdown gala to kick off Singles' Day which was watched by more than 400 million people in China. This year it will hold a similar event - this time bigger - headlined by American singer Pharrell Williams and hosted by Chinese actress Zhang Ziyi.
The retail gala is part of Alibaba founder Jack Ma's strategy and vision for the future of retail - merging entertainment and consumption.
Hong Kong-based Kiwi Marcus Glucina, director of New Zealand Focus, a company set up to showcase New Zealand's premier export products in China such as meats, honey and milk powder, says working on Singles' Day can be daunting.
"The team needs to work 36 hours non-stop to answer product queries, process orders and ensure everything goes smoothly," Glucina says.
"We cannot have any out of stocks, or negative consumer feedback that may negatively impact sales on the day or in the future. Extra staff is always required for packaging - particularly warehouse support - as thousands of parcels are dispatched in one day."
Glucina says sales on the day can exceed sales equivalent to a three to four-month period on the same channel and online site.
Nick Siu, director of commercial consultancy The Agency 88, says New Zealand's growing Chinese population, and festivities like Singles' Day, is good for business.
"One of the greatest benefits of the new migrant population is that they are just that - new, so they are very aware of events such as 11.11 that are happening back home in China and have friends, first generation relatives who are participating and enjoying those benefits from participating businesses," Siu says.
More than 171,000 New Zealanders are of Chinese origin according to the last census, and that figure is projected to increase to 370,000 by 2025.
Of the 171,000, 82 per cent are able to speak their native language.
"New Zealand businesses can demonstrate that they are culturally aware of these events and make themselves more relevant to the changing face of a 'new New Zealand'.
"This awareness does not go unnoticed within the Chinese community and may have significant spill-over benefits in brand awareness, sentiment and future trading beyond the transactions that are delivered on the day."
The euphoria of Singles' Day will make its way to New Zealand but retailers need to be careful of how they approach such events, Siu says.
"For retailers it is a step-by-step process," he says.
"Take a holistic and reasoned view of understanding the Chinese market first, secondly understand the size of the prize and thirdly strategically decide whether it is a direction the organisation wants to unlock.
"If those values align, they should be brave enough to not automatically go to creating an advert.
"The point is to be genuine and authentic to this audience who is participating in an equally novel and innovative event."
Such offers need to be communicated through channels such as WeChat, he says.
"WeChat is the dominant Chinese social media platform and is also a game changer in that it offers payment functionality," Siu says.
"This allows the participating 11.11 customer to make a transaction while in-the-moment, which is great for customer satisfaction but also the Kiwi retailer who can make the till go ring," he says.
"Whatever offer and participation an organisation has, it should not be seen as token, and if done correctly connects the domestic Chinese population together with an exciting event and potentially a very exciting export strategy."
It says it's collateral damage in the city's war on Airbnb and will try again elsewhere.