China can't stop the urge to splurge but there's always a catch

money-glitz | Aiden He 8 Nov 2021

China's Double 11 online shopping festival is likely to set new records this year even though the mainland's economy grew slower than expected in the third quarter.

But more than a decade into the biggest shopping event in the world, the grumbles are growing.

Shoppers say the discounts are complex and promotions never straightforward, with a myriad terms and conditions buried in the fine print, while the intense online marketing is cleverly created to get them to spend more and buy things they don't really want or need.

For the uninitiated, Double 11 takes its name from Singles' Day on November 11, which became a thing in China back in the nineties as an unofficial day of celebration for bachelors.

The number "1" is considered a symbol of being single in China, and November 11, when written numerically - 11.11 - has four of them!

Thirteen years ago, Alibaba (9988) decided to cash in on the event by turning the day into a shopping festival for singles, on the lines of the famous Black Friday sale in America, which is held on the first Friday after Thanksgiving.

Since its launch, Double 11 or Singles' Day has grown to become China's largest online shopping festival with records broken every year, while rival e-commerce giants like JD.com (9618) and Suning have also jumped in for a piece of the action.

Double 11 started off as a one-day affair but over time the sale was extended to nearly a month. Since last year, a first round of pre-sales generally kicks off October 20 during which buyers can lock in on a price and product by paying a deposit before settling the final bill during the sales window of November 1 to 3. This is followed by a second round of pre-sales from November 4, with the sale culminating in the November 11 Singles' Day sale.

Alibaba says it extended the sale to create "greater opportunities for merchants and brands to increase sales" and to enhance the "overall shopping experience of consumers by reducing pressure on logistics demand and ensuring timely delivery."

COMPLEX DEALS

However, placing an order in advance does not necessarily guarantee one the best deal as shoppers have found they can get the same price or even a better discount on the main sale day - without the hassle of making a down payment in advance.

"What is the point of paying a deposit? Am I buying futures?" a netizen raged on social media.

But the most complaints are about the complex way the sales are structured.

Shoppers say that they need to be a genius at math in order to get the best discounts possible.

For example, a rechargeable dental beat costing 189 yuan (HK$230) can be bought for as low as 130 yuan as long as the buyer uses a 40-yuan coupon and then adds on an item worth 11 yuan to meet the 200-yuan threshold for a discount of 30 yuan.

Making things even more complex are the numerous promotional coupons and discounts with different terms and conditions buried in the fine print on the web pages of these e-commerce platforms.

Then there are a plethora of live streams that market products with free samples and countless games designed to increase the traffic of sponsored brands and products by offering small bonuses or coupons.

Some bargain hunters say they end up spending more and buying things they did not want in the first place after spending a lot of time and energy trying to save money.

Others say that they are sick of the crafty strategies employed to lure buyers, with some prices deliberately inflated before being discounted.

Despite these moans, top e-commerce platforms say they are breaking new records, but their numbers are open to interpretation.

Alibaba recorded a gross merchandise volume of 498.2 billion yuan at its Tmall marketplace during last year's shopping spree with 371.6 billion yuan notched on November 11 while JD posted a GMV of 271.5 billion yuan from November 1 to 11.

In comparison, consumers spent just US$9 billion (HK$70.2 billion) on the web on Black Friday and US$12.7 billion on Cyber Monday in 2020 in the United States, CNBC reported, citing data from Adobe Analytics.

GO FIGURE

E-commerce platforms prefer to use GMV over revenue to represent their online sales as GMV - which includes shipping costs and other deductions - often exceeds the actual sales figure.

What makes GMV more controversial is that Alibaba does not allow consumers to submit return/refund requests on November 11. Buyers have to place another order if they want to change the shipping address, which pushes the GMV even higher.

This year's numbers are also looking promising.

Tmall says the GMV of more than 2,600 brands in the first hour after sales began on November 1 exceeded the entire amount of the same day last year.

Its competitor JD also saw a total of 139 brands on its platform each generating 100 million yuan in GMV, and 43,276 merchants saw their GMV rise by more than 200 percent year-on-year, as of the end of November 1, 28 hours after kicking off sales at 8pm on October 31.

The number of parcels picked up by couriers on November 1, meanwhile, surged 28 percent to 569 million, data from the State Post Bureau showed.

The two most well-known live streamers Austin Li Jiaqi and Viya recorded 10.7 billion yuan and 8.3 billion yuan, respectively in GMV on October 20, with each accumulating more than 200 million viewers of their live streams on the first day of pre-sales.

The scale of the festival this year is also larger than last year with more than 290,000 retailers signing up for the carnival and 14 million types of goods being showcased on Tmall, Caixin says.

Half of the consumers said they intend to spend more than 3,000 yuan - nearly 10 percent of the country's per capita disposable income in 2020 - at this year's festival, according to a survey covering 2,000 adult consumers by AlixPartners.

This bodes good news for the world's second-largest economy, whose growth in the third quarter slowed to 4.9 percent year on year and at the slowest pace since last year's third quarter. And with indications that Singles' Day may set new records, the festival will be a shot in the arm for overall consumption that has remained weaker than market expectations since the pandemic.



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