How Singles Day Gave Rise To China’s Digital Commerce Culture

Singles Day started quite humbly.

Before it was an international shopping festival raking in just under $50 billion in sales in a single day, it was an informal holiday in China, seen as an alternative to Valentine’s Day for single college students.

But a decade ago, Alibaba decided to turn Singles Day from an informal Nov. 11 holiday celebrated on college campuses into an event — specifically, a shopping event modeled after Black Friday in the U.S.

The first Singles Day event in 2009 didn’t look like much of a world changer, as the company took in only $7.8 million in sales. Black Friday, by comparison, brought in $595 million — and that was widely considered a bit of an off year because of the Great Recession.

In the intervening decades, both events have gotten bigger, but Singles Day (also known as 11.11) has long since surpassed its inspiration in terms of dollars brought in. In 2019, Black Friday generated roughly $7.2 billion in sales, while Singles Day brought in roughly $38.3 billion.

Part of that difference, PYMNTS discussed in a recent conversation with PingPong’s Senior Director of the International Product Richard Zheng, is a simple matter of size. There are roughly 240 million American adults, compared to 1 billion Chinese adults. Starting with a shopping population that is more than four times larger is a big advantage.

But, Zheng noted, it isn’t just the fact that China has a lot more people — over the last decade, the country’s digital commerce culture has evolved quite differently than its U.S. counterpart.

“The simplest example is that in the U.S., online shopping is associated with younger people, who do far more of it. That is not surprising at all,” Zheng told PYMNTS. “But in China, we also have a developing trend of mobile use among senior citizens, particularly around shopping. My grandfather has never so much as touched a computer before, but he has his smartphone at the ready to shop with whenever he needs it.”

And that difference shows up in a big way when comparing Black Friday and Singles Day head-to-head in terms of sales. But that contrast in digital commerce culture is just as visible and relevant in the day-to-day lives of Chinese customers.

Singles Day was an entry point that made commerce an event, Zheng noted. But in the longer term, it also shifted the Chinese eCommerce experience into something quite distinct from what is available in the U.S. and around the world.

Let’s Go to the Digital Mall

The American consumer’s digital journey is very segmented, Zheng pointed out. The customer who wants to shop goes to a large commerce marketplace, usually with a fairly specific idea of what to buy. The goal is efficiency — getting in and out with the desired goods as fast as possible.

Users show different behaviors on social media sites like Facebook, Instagram or Twitter, where they look at photos, stalk high-school classmates, share brilliant political theories, play games and the like. Commerce is beginning to develop on those portals, but it is still in the early days.

As of the ending days of 2019, Chinese consumers’ digital commerce experience has a somewhat different focus. Efficiently grabbing goods and going is not the universal top priority.

“So, if I’m on WeChat looking at pictures, and I see something my grandfather would like while I am there, I can make a post and push it to his WeChat,” Zheng explained. “And because it is a social media service with a wallet underneath that connects to his bank account, he gets my post, and if he likes it, he simply clicks and is done with his shopping.”

There is no diversion from what the user is currently doing and no need to leave the social app — just a smoothly integrated context for commerce.

And that is the Chinese digital commerce experience in a nutshell, said Zheng. It is wholly socially integrated, so that going to a virtual mall like Taobao isn’t an action item-oriented task, but a social one. The customer can interact with others by playing games to unlock coupons and discounts and to discuss the items they are virtually browsing together.

Similar to how American teenagers of a bygone era would head to the mall to hang out, Chinese consumers of all demographic groups have adopted the digital mall for much the same purpose.

When a big shopping event like Singles Day comes along, the deals are more intense, and the promotions are more interesting — but customers are still doing something they do every day. They are just more incentivized to buy.

Making the Events Happen

But, of course, consumers showing up and dropping almost $50 billion in a single day is a unique event in any environment. Singles Day has been transformative in terms of its effect on commerce. Before the advent of Singles Day, the fourth quarter of the year was retail’s “dead season” in China, but in the last 10 years, it has blossomed into the busiest.

On Tmall alone this year, the peak volume of transactions was 544,000 per second — a new record, and 1,360 times that of the first Singles day in 2009. And that transactional explosion isn’t limited to Alibaba; it spans the entire commerce ecosystem in China on Singles Day and beyond.

The holiday season is a unique phenomenon that lasts more than a day or two — it’s a multi-week, high-volume period made up of scores of moving parts, particularly for merchants. This, Zheng noted, is where PingPong often enters the equation to help direct-to-consumer (DTC) eCommerce players navigate the high-activity period.

On the consumer-facing front end, Zheng noted, that means PingPong must have its clients ready to offer smooth, safe transactions using whatever payment method they prefer.

The bigger challenge, however, is on the back end. Customers start preparing their shopping lists a few days in advance, and merchants must be planning, talking to suppliers, and readying the experience a few months prior. And, of course, unexpected things happen.

“Every merchant wants to have that item that is a bestseller of the season, but they don’t know which one that will be,” said Zheng. “It could be that they have a very popular item, but if they run out of stock, they can’t get the benefit.”

Not only is the merchant failing to capture the benefit, they are also accruing negative effects when they run out of stock. The time needed to get back up and running again takes a costly toll as their search rankings go down and they lose consumers.

Avoiding that result means getting ahead of it, Zheng said. When one item is selling faster, the merchant needs to have more ready to go out long before they actually run out. That can be challenging because the merchants very likely haven’t yet been paid for all of those first-round sales — and waiting around for those payments is likely to lead to a gap in their supply chain, meaning they would have to turn customers away.

For PingPong, that means helping their merchant partners get paid faster during peak season so they can better manage cash flow. It also means offering supply chain financing products, enabling them to even out those gaps that can occur when an unexpectedly popular product pops up and a merchant needs funds to keep the momentum going.

Deal days are challenges, Zheng noted, because they drive so much interest and action. And, as is the case in the U.S., they have a tendency to multiply. Singles Day has turned into Singles Week, and there is now a Dec. 12 shopping celebration, followed by New Year’s sales and Chinese New Year sales.

Consumers love a deal — and they love the experience of shopping for one. Where and how they do that is changing, said Zheng, and their preferences are being refined. No one wants to have the digital marketplace wish list sold off, for example.

The challenge for merchants, in China and around the world, is building for consumer tastes that will continue to evolve — albeit consistently along digital rails — in the 2020s and beyond.

“People love to shop in China, like everywhere else,” Zheng said. “What we’ve seen in the last 10 years is the opportunity to create new, appealing ways to do it.”