Arguably the most public face of China’s e-marketing juggernaut is Singles’ Day. One can’t help but be in awe of the sheer scale of it: 278 million orders for 30,000 brands offering everything from smartphones to smart-looking underwear were placed in the 24-hour window, resulting in over US$ 14 billion changing hands. And it’s speeding up like a rocket. This year’s dollar volume was 60% greater than the year before and it was the same the year before that. And given the runaway success of it, e-comm titan Alibaba, which first commercialised this celebration of singledom, plans to use the Singles’ Day concept to spearhead Alibaba’s globalisation strategy. Within a year or two, this China-born shopping frenzy may become another commercialised global date like Valentine’s Day – but on a whole different scale.
But what is interesting about all of the commentary about Singles’ Day is that it tends to be from Alibaba’s perspective -the retailer. But what does it mean for the brands? Are they as happy as Alibaba seems to be? Is Singles’ Day a happy marriage for both the retailer and the brand?
One chink in Alibaba’s red armour may be the return rate. For most retail brands in traditional retail (or what’s left of it), this is well under 10%. Consumers have a chance to see the product up close, to try it on and to decide if they really want it or not. For e-comm brands, this return rate is often over 10% as free shipping encourages people to have a ‘trial-and-error’ approach to buying, which maximises the volume but adds a very expensive processing cost to the brand and its staff. E-comm retailers such as Alibaba don’t suffer one bit, as all costs are borne by the brands themselves; in fact, they would benefit in the event of a rebuy.
In the endless shining media coverage of Singles’ Day, you can find mention – if you really search for it – that the average return rate is a massive 25%. That’s 70 million orders returned, which have to be picked up, unpacked, inspected, repacked and so on. But unofficial accounts from some individual participating brands mention even higher return rates. One globally famous luxury apparel brand told this columnist that it had 50% of orders returned and is ‘very concerned’. And the number-one purchased women’s apparel brand, Handu, experienced a 64% return rate. ‘Sell’ three, get two back.
The expectation of huge volumes of online purchasing has proven equally attractive to fraudsters as it has to consumers, who participate in ‘shua dan’ (literally, painting numbers), according to J Capital Research’s Kitty Ma. In the scam, people purchase goods and then immediately return them in order to hype up the excitement and mass popularity. One case in point was the liquor retailer called 1919 which offered the very expensive Wuliangye brand of Chinese Baijiu liquor. At the stroke of midnight, and the start of the sales period, 26 cases of Baijiu were sold in only two minutes in Alibaba’s Tmall site. This unlikely volume was exposed as a fraud by skeptical consumers and widely distributed as an example of hyping. It was estimated that 50% of 1919’s sales were ‘shua dan’ or faked.
But a greater concern is about the concept itself. Once you strip out the singles part, which has been long forgotten and is no longer important to the retail concept, ‘Singles’ Day’ is little more than an ugly discount orgy where everyone is invited. There’s always been a strong voyeuristic streak in China, and Singles’ Day feeds it, with brands paraded in front of a screaming crowd of millions, stripped of their normal pride, their value – and, some might say, their dignity. As it adds pressure to offer steep discounts, Singles’ Day acts as a reversal of everything brands have worked so hard to build up. Consumers now stuff their digital baskets in the months leading up to the 24-hour buying mania, effectively postponing transactions at normal prices until the sale day. If this isn’t an organised erosion of brand value, then what is?
Singles’ Day now feels a bit like a runaway roller coaster in the Alibaba theme park. The brands are on it. They were the willing participants. But it’s too powerful now. You can’t easily get off it, and you can’t control where it goes. As the speed picks up, there is a sense of regret.