It’s almost time for the world’s largest online shopping day…
No, I’m not talking about America’s Black Friday or Cyber Monday.
I’m talking about Singles’ Day.
Singles’ Day is a one-day sales event in China – and increasingly, elsewhere – on November 11. It’s like Black Friday and Cyber Monday – on steroids.
And this year should prove to be the biggest online shopping day yet…
A primer on Singles’ Day
Singles’ Day (originally called Bachelor’s Day) started in 1993 as a celebration for people who are single. November 11 was chosen because it is the 11th day of the 11th month. It’s the date with the most “1s” – that is, “one” to represent being single.
Then in 2009, Chinese sales giant Alibaba started the first Singles’ Day sales event for anyone looking for a deal (regardless of their relationship status!). Twenty-seven merchants took part through Alibaba (Alibaba is like the Amazon of China). Alibaba posted US$8 million in sales.
Fast-forward to 2016… and Singles’ Day generated US$1 billion in sales in the first five minutes. Within two hours, consumers had purchased US$7.2 billion worth of goods on Alibaba. By noon, the total was US$11.9 billion… and the day’s final total was US$17.9 billion – 24 percent higher than the previous year’s total. In fact, it only took 15 hours to eclipse 2015’s total.
For comparison, America’s Black Friday only generated US$3.3 billion in total sales – online and in store – last year. And Cyber Monday saw sales of US$3.5 billion online.
Chinese consumers were spending US$741 million per hour – and that was just online at Alibaba. The day’s total was equivalent to the entire economic output of Cambodia (or close to the U.S. state of Illinois).
Alibaba is the undisputed winner of Singles’ Day. But there are lots of others. For example, Autohome.com, an automotive advertising website in China, sold around 100,000 cars online on Singles’ Day last year.
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Singles’ Day is so big that Alibaba launched a nationally-televised 11.11 Global Shopping Festival Countdown Gala in 2015. This television event is like the Super Bowl or the Oscars in America. In 2016, it featured basketball player Kobe Bryant, footballer David Beckham and the band OneRepublic.
This year, pre-Singles’ Day promotions and events started on October 19… and post-sales are expected to continue through December 12. Over 140,000 brands will participate (including 60,000 international labels), featuring promotions for more than 15 million products.
The televised 11.11 Global Shopping Festival Countdown Gala will include American musician Pharrell, Chinese actress Zhang Ziyi and pianist Liang Liang.
And Forbes forecasts that Alibaba could come close to hitting US$1 billion in sales an hour – which means Alibaba could generate sales of more than US$20 billion in that one day alone.
This year’s Singles’ Day will likely be the biggest shopping day ever.
China’s middle class is booming
So who’s doing all of this shopping? In short, the Chinese middle class.
According to a study by consulting firm McKinsey & Company, 76 percent of China’s urban population will be considered middle class by 2022. Back in 2000, just four percent of China’s urban population was considered middle class. That’s defined as urban households that earn US$9,000 – US$34,000 a year. (That might not sound like a lot, but adjusted for prices, it delivers a roughly comparable “middle class” existence to other countries.)
China had an urban population of 730 million people in 2015. So even if that figure doesn’t change (and it will only grow), by 2022 over 550 million people in China will be considered middle class. That would make China’s middle class alone big enough to be the third-most populous country in the world.
China’s middle class will be making more money
According to McKinsey, in 2012 54 percent of China’s urban households were considered “mass middle” class, meaning they earned between US$9,000 and US$16,000 per year. But by 2022, thanks to a growing number of higher-paying high-tech and service industry jobs, 54 percent will be classified as “upper middle” class – meaning they earn between US$16,000 and US$34,000 a year.
And China’s growing middle class plans on spending more money – a lot more.
Chinese consumption (the amount of stuff people buy) is expected to grow 9 percent a year through 2020, according to the Boston Consulting Group.
Overall, the consumer economy is forecasted to grow by 55 percent, to US$6.5 trillion. That’s an increase of US$2.3 trillion – which is like adding a new consumer market 1.3 times larger than the current consumer markets of Germany or the U.K. And that’s assuming that China’s GDP will grow by 5.5 percent a year, which is lower than the projected growth of 6.5 to 7 percent a year.
As China’s middle class grows – along with their disposable incomes – Chinese consumers are buying things at a rate never seen before. And that will create investment opportunities in a wide range of sectors.