Michael Zakkour, Vice President and China/Asia Pacific Practice Leader at Tompkins International, delivers a lecture on Chinese and U.S. shopping festivals on November 2 in New York (DING YING)
Americans often tout "Black Friday" as a day of mass consumerism sparked by deep discounts that propels U.S. retailers into profitability and kicks off the holiday shopping season. But for a real sense of what power a national shopping spree can have, look to China, where in just 15 hours online consumers spent double what American shoppers did in 2015 on Thanksgiving, Black Friday and Cyber Monday combined.
"Singles' Day," held on November 11, started out as a cheeky anti-Valentine's Day celebration in China and has morphed into a $20-billion sales event attracting global retailers like Macy's, Victoria's Secret and Apple. Michael Zakkour, Vice President and China/Asia Pacific Practice Leader at Tompkins International and Special Advisor for the Confucius Institute for Business at the State University of New York, calls it the "largest single shopping event in human history."
The celebration of Singles' Day as an ode to mass consumerism is thanks to one man, Jack Ma--founder of e-commerce giant Alibaba. Ma, inspired by the success of Amazon, built Alibaba into the largest e-commerce company in the world with $300 billion in annual revenue. Singles' Day is Ma's answer to Black Friday. A star-studded "countdown gala" featured celebrities like David and Victoria Beckham, the U.S. band OneRepublic and NBA star Kobe Bryant.
"Last year in the first hour [of Singles Day] alone, Chinese consumers bought a $1.5 billion worth of merchandise," Zakkour says. "The final tally last year was in 24 hours Alibaba sold $14.5 billion worth of merchandise. That is the power of 600 million Chinese consumers."
For perspective, in just one day, online sales in China surpassed Brazil's total projected e-commerce sales for the entire year. The number of China's online consumers is double the entire U.S. population.
One hundred years ago China was largely an agricultural society run by warlords and competing powers, Zakkour says. Over the past 15 years, 350 million people have entered the middle class and that number is expected to double over the next decade.
These kinds of numbers make China an essential market for U.S. brands. Overall, 11,000 non-Chinese brands promoted their products on Alibaba's Tmall site this Singles' Day--double the number from 2015. In just the first two hours of the festival, gross merchandise volume of U.S. products exceeded the total from last year's Singles' Day. U.S. retailers can only access this goldmine through Alibaba.
"A lot of brands have tried to set up their own website and to access consumers directly, but they've not been very successful," Joseph Tsai, Alibaba's Vice Chairman and co-founder, told CNBC. "Consumers are going directly to Alibaba."
The reach of Singles' Day is extending beyond China's borders to other countries, usually centered around overseas Chinese communities. According to Shoprunner, the volume of online orders by Chinese Americans jumped 900 percent in the three days leading up to Singles' Day. U.S. brands like Target, Costco, Macy's and Starbucks were available for the first time on Alibaba's Tmall this year.
"I personally haven't bought anything on Alibaba yet," says Rayli Lin, a Chinese American young professional living in Brooklyn. "But I know plenty of people who have. This summer I went to China to visit relatives and we did a lot of shopping. Everything is available there--all of the same brands. And it's much nicer to shop over there--big shopping centers and stores. New York can be more of a hassle."
Protectionist trade tariffs, as promoted by conservative U.S. politicians, may only harm the U.S. economy, says Duncan Clark, founder of BDA China and author of Alibaba: The House That Jack Ma Built, as Chinese consumers are big fans of U.S. products.
Even the National Football League, a bastion of Americana, is getting in on the Singles' Day action, with a contest to win an autographed item from star Peyton Manning and deep discounts on fan hoodies and jerseys on its Tmall site Nflchinashop.com.
Back to black
Compared to the Singles' Day extravaganza, America's Black Friday and Cyber Monday look paltry in comparison with a combined $5.8 billion in online sales last year. Despite this, online sales for this year seem set to surpass 2015.
While brick-and-mortar sales at U.S. retailers actually slid 10 percent this year, online sales for Thanksgiving and Black Friday skyrocketed nearly 18 percent to reach $5.27 billion, according to Adobe. Black Friday 2016 was the first day to earn over $1 billion in online mobile sales, totaling $1.2 billion for the day and an increase of 33 percent over 2015. Adobe also reported that retail companies that invested in mobile, social and email capabilities saw 30 percent more in average sales and 25 percent more in average order values.
Thanks to an estimated 5.2-percent increase in the median income in 2015, Americans are set to break new records for the holiday shopping season. Projections for overall holiday spending are up an estimated 4.1 percent year over year. Consumers are expected to spend $636 on average on holiday purchases this year, according to the National Retail Federation.
Laura Patterson, a mom of three from New Jersey, says she plans to do a mix of online and traditional in-store purchases for her holiday shopping. She woke up early on Black Friday to hit morning sales at Macy's and at her local mall, but plans to score most of her shopping deals on Amazon.
"My oldest daughter wanted to go [shopping for Black Friday] and it's fun. There are always a lot of people and we have lunch. We make a day out of it. But really I find the best deals on Amazon and if there is something in particular that I want—that's where I go," Patterson says.