Singles Day shopping festival: China still the road to riches despite pandemic challenges
China’s Singles Day, the world’s biggest online shopping festival, this year showed flat growth overall, but several Australian companies managed to still increase sales.
After a decade of touting record-breaking sales at the blockbuster Singles’ Day shopping festival, there was unusual circumspection from Chinese e-commerce giant Alibaba at the end of this year’s event.
The sale, held on November 11 every year since 2009, is a major annual event. There was an 8.5 per cent rise in gross merchandise value in 2021, and a 26 per cent increase the previous year. But Alibaba last week would only say that the results were in line with last year “despite macro challenges and the impact of the Covid-19 pandemic”.
Data released last week shows that across the board, retail sales fell 0.5 per cent in October from a year earlier, the first such decline since May, when Shanghai was in lockdown. Several major cities still face heavy restrictions.
But local companies with large exposures to China’s consumer market appear to be bucking the trend of lacklustre sales – so far.
Australia Post even recorded a jump in parcel volumes – of some 18 per cent – following the Singles’ Day sales, compared to the previous week. Rose Yip, the postal service’s head of e-commerce data analytics, said fashion goods contributed most to the gain, with an increase of more than 30 per cent. “This is a strong uplift, indicating shoppers are seeking more value and holding out till the sales events,” Ms Yip said.
Bubs Australia, the ASX-listed infant formula producer, held on to its ranking as one of the most popular goat milk brands on Alibaba at this year’s Singles’ Day.
“Our focus this year was on ensuring our brand image is consistent across e-commerce and that there is no significant discounting or promotions. We managed to do so, while maintaining our ranking,” said Bubs chairman Dennis Lin.
“We are pleased with the results, and acknowledge shopping festivals remain an important element of marketing in China. We saw a materially higher ratio of new first-time customers during the period. It is an indication that our brand awareness continues to improve and grow in China.”
Mr Lin said the exact quantum of the sales would take about two weeks to calculate, as it collects data from all platforms, including direct-to-consumer, stores and third-party online retailers.
Bubs’ larger rival, A2 Milk, saw sales lift 5 per cent during the sale.
David Hearn, the company’s outgoing chairman, said A2 and one other international infant formula company – which he declined to name – had been the only ones to deliver growth in China in the past three years.
“Some of the ones who have not succeeded in growing share are some of the world’s most famous companies,” Mr Hearn said.
“I’m not here to belittle or to cast stones at our competitors but I think we should recognise that A2, which is a minnow by comparison to the world’s largest consumer good businesses, (has) been able to grow consistently by doing what we do best, which is looking after consumers’ interests.”
But A2’s success in China has prompted criticism, with one shareholder asking Mr Hearn at the company’s annual meeting on Friday whether it was wise to continue to generate about half its revenue from the one market that is a “semi-authoritarian state”.
Indeed, A2 lost about 70 per cent of its market value following the collapse of the lucrative Chinese daigou trade in 2020. Mr Hearn prefers other numbers.
“I should make the key point that we’re not involved in geopolitical concerns. We’re running a business,” he said. “The China market is about half the world‘s infant formula (market) on its own. Despite the fact that its birth rate is declining and therefore the market is not as buoyant as it once was, it still remains over half the entire market worldwide.”
Blackmores chief executive Alastair Symington said the Singles Day’ festival – also known as Double 11 – and other online sales events continued to be “substantial growth drivers for Australian businesses in China”. “In fact, it offers the highest traffic in the whole year, which has a significant impact on our flagship stores and brand exposure in the region. We know that consumers use the festival as an opportunity to stock up on their favourite products for the future,” Mr Symington said. “Blackmores achieved a strong ranking in several vitamin and dietary supplement segments, with consumer demand continuing to grow in premium fish oil and eye care.”
Mr Symington said Blackmores also launched its pet range in China during this year’s festival, to capitalise on findings that 45 per cent of consumers preferred to give their pets natural products and 75 per cent were trying to prevent animal health issues. “The Double 11 Festival is a fantastic opportunity to build on the strong momentum we have achieved.”
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