Mintel predicted a 40% growth in Gross Merchandise Volume (GMV) during Singles’ Day 2016, compared with the event in 2015, to reach US$ 20 billion. Were we right? Well, not far off. In fact, the total GMV for this year’s 24-hour online retail extravaganza reached a GMV of US$ 17.8 billion. Despite slower growth than predicted; it is still significant, and with a lot of money spent. This slowing of Singles’ Day sales does not indicate that the strength of the Chinese consumer economy is “weakening”. Nor does it indicate that the rapidly rising online retail market is running out of steam, we would argue. What we do argue is that Singles’ Day, having achieved its aim (thanks to Alibaba) of raising consumer acceptance of online shopping, has largely done its job, and should perhaps become less of an instrument of online retail development in China. Selling products in a confined time period at as much as 50% off retail prices does create big orders, but not big profits for retailers. It also means that sales either side of the event likely take a hit, as people hold off shopping in the weeks prior to the event, and rest replete in the weeks immediately following it. As Mintel has argued in its report Online-to-offline Retailing – China, 2016, the emphasis for online retail now is not being just a cost-cutting portal, but must begin to create some added value. We know from the results of many of our China reports that consumers are trading-up to spending more money to buy better quality products and services. They don’t need cheap, they need (and want to get) value for money. At the same time, retailers face mounting costs, competition and constrained margins. This means their business model cannot sustain pursuing a price-cutting war of attrition any longer – they need to make profits to stay in business. That means offering higher-end products and services to suit the increasingly diversified tastes of increasingly demanding and choosy shoppers. The occasional sale can help to bring in new shoppers to a brand, but all-in events such as Singles’ Day mean only the loudest, brashest brands can gain much lasting traction from among the 100,000 or so merchants who participated in the event. Singles’ Day is therefore more of a success for the portals (such as Alibaba and JD.com) that promote the event, as they make much of their income from advertising and services offered to merchants. But, for retailers and brands, visibility, brand traction, customer “footfall”, value-added spending and profits need improving. And, arguably, Single’s Day no longer really achieves that for the majority of brands. The most interesting aspect of this year’s Singles’ Day event was its theme. Last year’s theme was opening-up the rural market. This year was all about virtual and augmented reality (VR/AR) online shopping. This Mintel mentioned (in the above report) is going to be the next big thing in online retail. Matthew is Mintel’s Director of Research for Asia-Pacific. He looks at the development of China’s consumer lifestyles and the impact on Chinese people and society. Having previously co-founded research company Access Asia, Matthew has worked exhaustively on trying to make sense of the myriad of contradictions in China’s economics and statistics on consumer markets across China. You might also be interested in: No related posts.