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China’s 11.11 — Global Shopping Festival 2019 sales growth strong, consumption drive from lower tier cities

2019-11-12 5 minute read UK

Make 11 Happen logo with Alibaba ecosystem mascots / Alizilla

The largest global shopping festival — Double Eleven (11.11), also known as Singles Day — shows no signs of slowing down for the 11th consequitive year, with a high consumption growth rate from the tier 3 and 4 cities.

During the past decade, the Double 11 shopping festival has been evolving rapidly to now become the biggest shopping festival globally. The performance of sales during this 24-hour shopping marathon is one of the key indicators of Chinese online retail consumption potential, and is a significant contributor to the economy.

This year, Alibaba Group established a new record with more than 268.4 billion RMB ($38.4 billion USD) in sales revenue (GMV — gross merchandise volume), a rise of 25.7% from the previous year. Nearly 300 brands (299) posted one-day sales GMV in excess of 100 million RMB (including Apple, Nike, Estee Lauder, Giorgio Armani).

Screenshot of the 11.11 landing page GMV counter at midnight, showing the final results

JD.com, Alibaba’s main rival, held a range of sales promotions during the first 11 days of November, achieving total sales revenue of 204.4 billion RMB ($29.2 billion USD) during the first 11 days of November.

Lower tier areas see strongest consumption growth

The fastest growing consumer demand has been recorded in tier 3 and tier 4 cities, confirming the trends seen elsewhere that the spending power and amount of disposable income in those areas are quickly increasing. The overall consumption growth rate of tier 3 and tier 4 cities are 2-7 times faster than tier 1 and tier 2 cities, the less-developed markets reflecting a huge potentials of consumption.

This has been a trend and a common pattern for a number of years, as ACOLINK’s CEO has been emphasizing at the #LetsDoChina UK Roadshow series of events. She said that “businesses that are committed to enter the market, or scale their sales to China, need to be more open-minded and should consider looking beyond the first/second tier cities for growth; this is especially true for smaller and niche brands that may find it difficult to set their foothold in this already very competitive environment that is Beijing or Shanghai”. She also added “(…) this is a growing trend that we see often when analysing the in-market strategy for our clients — invest in your research and back it up with data — you’ll likely find that first-, second-, sometimes even third-(tier) cities are not necessarily where your target customers are”.

Top buying factors

It’s worth noting that the price discount is only one of the top buying factors that attract buyers to Double 11. Social engagement (such as referrals, KOL, celebrity/media endorsement), and exclusive character of products (new product releases, limited editions) play also an important part.

Interestingly, according to an analysis carried out by McKinsey China, Tier 1 and Tier 2 cities tend to be the ones that are most price sensitive and less influenced by social engagement and exclusive character of products, in comparison with Tier 3, Tier 4 and Rural areas.

Trending categories

There was a surge of spending in various different categories. Tier 3 and Tier 4 cities have seen particularly significant growth rates in the following categories:

  • small household appliances
  • home & living
  • household cleaning & personal care
  • baby & mum
  • supplements
  • imported foods & fruit

Overall, the top trending categories were:

  • Luggage and bags (Tmall)
  • Women’s apparel (Tmall)
  • Shoes (Tmall)
  • Men’s apparel (Tmall)
  • Electronics (Tmall, JD)
  • Smartphones (Tmall, JD)
  • Home appliances (Tmall, JD)
  • Watch and glasses
  • Digital cameras (JD)
  • Earphones (JD)
  • Sport (JD)

New product launch was one of the key features of this year’s festival:

  • more than 1 million new products were rolled out for the festival
  • almost 120,000 new products accounted for imported goods

The top 10 countries selling to China through Alibaba’s cross-border (tmall.hk, Kaola) platforms were:

  • Japan
  • US
  • Korea
  • Australia
  • Germany
  • France
  • UK
  • New Zealand
  • Italy
  • Canada