Singles’ Day began on Chinese university campuses in the mid-1990s as a counterpoint to Valentine’s Day for couples. Now 11.11, four 1s as the date is written, is a $30 billion global shopping event, bigger than last year’s record-breaking $7.9 billion Cyber Monday online shopping day in the US. PPRO considers what this year’s 11.11 global shopping festival will bring and how to get ready.
Popularized in 2009 by an executive named Daniel Zhang who used the date to promote Tmall, Alibaba’s virtual mall for brands, with just 27 merchants participating. 11.11 was aimed to publicize online shopping and encourage sales in the quiet period between Golden Week in China and Christmas. It’s certainly delivered on those objectives and continues to grow each year.
Consumers spent $1 billion on Alibaba platforms in the first 1 minute and 25 seconds of last year’s event and racked up $30.8 billion in spending by the event’s close, an increase of 27% in 2017.[1] That is more than the Annual GDP of Uganda or Estonia. This makes 11.11 the world’s biggest retail event, three times larger than Cyber Monday 2018, which at $7.9 billion was a new US record for online sales in a single day.[2]
11.11 is becoming increasingly popular outside China. Customers from around the world can shop on Alibaba Group websites and retailers worldwide are jumping on the 11.11 bandwagon by offering promotions on their own websites to coincide with the event.
In fact, retailers such as Adidas, Apple, Dyson, Estée Lauder, Gap, Kindle, L’Oréal, Nestlé and Nike were among the 237 brands that exceeded RMB 100 million ($14.4 million) in sales during the 2018 event.[3]
How retailers can cash in
As 11.11 becomes more global, payment is going the other way. It’s becoming more local, especially across APAC and beginning to Europe. This stands to reason that there is no single global way to pay.
PPRO saw online transactions using certain local payment methods increase 2-2.5 times during 11.11 in 2018 across of variety of merchants and industries compared to the same period in 2017. A lot of these were bank transfer payment methods, which account for around half of all online payments in Austria, Germany and Poland, up to 70% in the Netherlands[4], but also very popular in Malaysia, Indonesia and Thailand.
With only 40% of online payments in Europe and less in APAC, made with a plastic card,[5] retailers must accept that they will miss out on sales unless they can localize payments.
Retailers need to be acutely aware of how their customers, and potential customers, prefer to pay and make sure that all of them are in good working order in the run-up to 11.11.
Catch-22
The dilemma for retailers is that customizing and simplifying payment choices for customers often creates complexity behind the scenes. This is usually in back-end systems and the processes needed to collect, reconcile and refund multiple payment types.
Getting paid is a crucial part of business, but it’s not a retailer’s core business. So, they need to consider how much time, effort and budget they want to invest in localizing payment.
The solution to the dilemma is simple; Outsourcing back-end payment operations allows retailers to focus on the front-end engagement with customers, where they can add value and create a competitive advantage. This means developing smart partnerships for local payment expertise.
About PPRO
PPRO removes the complexity of cross-border and domestic digital payments. We acquire, collect and process local payments methods across 175 countries for payment service providers under one contract, through one platform and one integration. This allows our clients to expand customer reach, arrange hassle-free collection and achieve higher conversion rates for their merchants.
PPRO has been a strategic partner of Alipay, the in-house international payment service provider for the Alibaba Group, since 2015.
Founded in 2006 and headquartered in London with offices across the world PPRO is global financial institution with an e-money licence issued by the Financial Conduct Authority, the UK financial regulatory body. For more information, please visit www.ppro.com
[1] ‘Alibaba Group generated RMB 213.5 billion (US$30.8 billion) of GMV during the 2018 11.11 global shopping festival’, Alibaba Group press release, 12 November 2018, https://www.alibabagroup.com/en/news/article?news=p181112
[2] ‘Adobe Analytics data shows that Cyber Monday broke online sales record with $7.9 billion’, Adobe press release, 26 November 2018, https://www.businesswire.com/news/home/20181126005829/en/Adobe-Analytics-Data-Shows-Cyber-Monday-Broke
[3] ‘Alibaba Group generated RMB 213.5 billion (US$30.8 billion) of GMV during the 2018 11.11 global shopping festival’, Alibaba Group press release, 12 November 2018, https://www.alibabagroup.com/en/news/article?news=p181112
[4] PPRO Payment Almanac, Western & Central Europe, individual country profiles, www.ppro.com/almanac
[5] PPRO Payment Almanac, Western & Central Europe, www.ppro.com/almanac