By Chen Jing
RMB 19.1 billion Yuan! The single day transaction volume of Alibaba's Tmall and Taobao on November 11 marked a magnificent achievement in the development history of China's online shopping. This number equals almost to one sixth of the annual sales value of China's home appliance magnate GOME in 2011. According to statistics from the National Bureau of Statistics of China, China's overall retail sales of social consumption products in October amounted to RMB 1,893.4 billion Yuan. At this rate, the RMB 19.1 billion Yuan accounts for up to 31.2 percent of China's daily retail sales in October.
During the "Double 11" sales, Alibaba was not the only winner. According to statistics from China Ecommerce Research Center, 317 out of the 400, or about 80 percent of, ecommerce enterprises interviewed said that they organized sales promotion on November 11. Yu Liangchuan, director of the Planning Department of GOME's online store, suggested that on November 11, sales of GOME's online store increased by more than 5 times compared with the same period of the previous month. Statistics show that 360buy.com had more than 400,000 orders on that day, an increase of more than 290 percent compared with the same period of last year. Suning.com said that its sales on that day increased by more than 20 times year on year.
With the sweeping victory of online shopping platforms, the struggle between online shopping and traditional retailing, representing the new channel and the old channel respectively, begin to surface again. Ma Yun, chairman of the board of Alibaba Group, said that: "The new commercial eco system led by ecommerce enterprises will raise a revolutionary coup against the traditional commercial eco system".
Everyone has their clever moves to share the cake
"In 2005, GOME and Suning waged a price war in Nanjing. Consumers began to line up before dawn. According to statistics published at that time, the total transaction volume of both parties on that day amounted to about RMB 100 million Yuan. 7 years later, consumers' carnival moves to the internet, and the transaction volume was nearly 200 times more", said Yang Bin, founder of Analysys, about the vigor of online shopping.
In spite of that, the "double 11" sales are not the normal status of the online shopping market after all. The State Council's Guiding Opinions on Vigorously Promoting the Development of IT Application and Effectively Safeguarding Information Security published in July this year proposes that: by the end of the 12th Five-year Plan, online retail value should account for more than 9 percent of overall retail sales of social consumption products. At the end of the 2011, the proportion was around 5 percent. Judging from this rate, online shopping is nothing but a small piece of the large cake of products retailing. Statistically alone, it is still too soon to say that online shopping has taken the place of traditional commerce.
Even so, consumers always have more than one store to buy from. Traditional enterprises would not sit idly by and watch their retail channel being snatched away. During the "double 11" sales, major department stores in Beijing, Hangzhou, Xi'an, Chongqing, and other big cities have all launched big sales events to confront the challenge. In Chongqing, one department store introduced a bargain of "RMB 100 Yuan for RMB 230 Yuan" for designated products. Salesperson in the mall said that: "Online shops give 50 percent discounts during the "double 11" sales, we can do better than that here". Suning put on an even clever move. Its more than 2,000 online and offline stores launched simultaneous sales on November 11, and took advantage of online advertising. Li Bing, executive vice president of Suning.com, said that "we completed 3 million orders in three days. The synergy of online and offline efforts save us a large sum of marketing expense and reduce cost greatly".
"Seeking fortune on the internet" has become the common choice of major traditional enterprises. As of the end of 2011, more than half of the top ten chain-store enterprises had launched ecommerce business. Compared with purely online shopping platforms, they have more offline resources and more management experience in presales, sales, and after sales, such as storage layout and maintenance service. In February 2012, Wal-Mart announced its increased investment in the online shopping site yihaodian.com, its holding of the site's shares increasing to about 51 percent, completing its control of yihaodian.com. Yu Gang, chairman of the board of yihaodian.com said that many of Wal-Mart's resources and experience, including purchasing, warehousing, and logistics, would open to yihaodian.com.
What traditional retailers lack are internet experience and the knowledge of the operation rules of ecommerce. Some of them choose to work with third-party ecommerce platform. Zhang Yong, CEO of tmall.com, suggested that in this year's "double 11" sales, the daily sales of the digital chain store "D.Phone" reached RMB 94.59 million Yuan, its eye-catching performance ranking fourth among the day's top selling stores.
However, online shopping's impact on traditional commerce is far from insignificant. Online price tends to be lower, and this chills the secondary and tertiary agents who represent an important link in the traditional circulation channel. A digital marketplace now becomes a place to "check out the products" and a clothes shop becomes a "fitting room". Kuang Qiang, CEO of online store outsourcing service provider eacha.com, said that: "Jiangsu's Nantong city is the best known home textiles market in China. There, almost every supplier has their own store on taobao.com. Some have even closed down their physical stores so as to focus on online business".
New endeavors pointing the direction for offline business
Online shopping illuminates traditional commerce with more than a swapping sales figure or a simple movement of the mouse. The traditional retailing industry has also draw lesson from the internet to improve business.
Zhang Tianbing, partner of market research organization Deloitte Consulting, said that: "The popularization of ecommerce and internet technology will bring huge changes to the entire commercial supply chain. Now, orders are placed with dealers and the goods are delivered to the buyer's distribution centers and enter supermarkets or shops for sales. In the future, accurate demands information will enable traditional business to better control production organization and distribution channels. From this perspective, the changes of consumers' shopping habits and innovative marketing approaches brought forth by online shopping will all help to further optimize traditional business".
