Published on the 14/11/2018 | Written by Heather Wright
It’s not just fancy numbers for a foreign company…
Alibaba’s Singles Day sales on Sunday smashed records as virtual cash registers rang to the tune of more than US$30.8 billion in just 24 hours, with Australian and Kiwi companies among those cashing in.
Thomas O’Connor, Gartner global retail supply chain senior research director, says behind the headline figures lie big opportunities for A/NZ businesses who can capitalise on our countries’ clean green, healthy, outdoorsy ethos.
“It’s easy to think about these special sales days as just these large numbers that are happening offshore and that we can’t tap into, but the reality is there are a number of businesses from Australia and New Zealand that are succeeding and really taking this opportunity that is being presented,” O’Connor says.
“The reality is a number of A/NZ businesses are succeeding and really taking this opportunity.”
“Forty percent of shoppers on Singles Day purchased from international brands and Australia was number four for top international selling markets. [New Zealand, with its much smaller size, ranked ninth.]
“There is a real big story in that for A/NZ brands, particularly those who have traditionally been selling products in high demand from the Chinese consumer.”
It’s a view shared by Doug Casement, IDC New Zealand senior research manager for IT services and insights, who says the sales day was a ‘great opportunity’ for local businesses.
“There are good examples of companies in all different sectors having a play – you’ve got everyone from Fonterra to Auckland beauty company MYM who make a lot of money on Singles Day.
“Alibaba especially is very much an ecommerce platform. If you’re a retailer and you’ve got something that might be appealing to the market, there’s nothing to stop you jumping on, setting up an account and selling stuff, just as you would on [NZ ecommerce site] Trade Me,” Casement says.
More than one billion packages will be shipped on the back of Singles Day sales.
“When you see these sorts of numbers it really expands on what that opportunity looks like and the sheer appetite the Chinese consumer has for product and their willingness to shop online,” O’Connor says.
He notes that in China around 20 percent of total retail sales are made online.
“It’s one of these things where if you are able to find the right avenue into the market, there is a lot of opportunity.”
Both O’Connor and Casement agree marketplaces such as Alibaba’s offerings, which include JD.com and Aliexpress, provide a good route to market for A/NZ.
“China is an important market for New Zealand fullstop – it’s our top export market at 20 percent of exports – and things like Alibaba and JD.com make it even easier for local companies to get in there,” Casement says. “You don’t have to sit down and build your own platform. You don’t have to know anything about ecommerce, you just have to do a little research and find out what will sell in the Chinese market and you can do most of that frankly by looking around Alibaba and seeing what else they is there, and how they are pricing it.”
O’Connor says the big winners for the Chinese market tend to be those associated with A/NZ’s overall image, often food and beverage, including wellness products.
“The whole issue this year around fake honey here in the Australian market has been a good precursor to say this is why the Chinese consumer looks to foreign brands, they want trust, they want a brand they know is of high quality and that quality piece is what they look for.”
Among the winners in this year’s sales were Swisse vitamins and Australian Lamb, while on the New Zealand front, Fonterra’s butter and baby formula, Ecostore, Fernz skincare, Antipodes and MYM all reaped the benefits of the sales.
“MYM said Singles Day was significantly above last year for them – 30 percent of its dream target,” Casement says. “And they sold a lot of items that were not on sale too, and that’s the other thing – it’s a great opportunity for customers to learn about other things a company offers.”
Being part of Singles Day isn’t all smooth sailing however, with O’Connor noting that demand forecasting is ‘hugely difficult’. Get it wrong and companies can end up overstocked or, alternatively, counting the cost of lost sales.
“For the A/NZ businesses trying to move into the market the biggest challenge is identifying how they’re partnering, the right products and what the potential demand looks like,” O’Connor says.
He says while promotions like Singles Day require companies to have some scale, the overall Chinese market and the partnership opportunities that Alibaba – which opened offices in Melbourne early last year in a push to get more Australian brands to sell into China – and other large ecommerce businesses are offering means ‘there is an awful lot of opportunity not just for the biggest players, but also for smaller ones as well.’
This year’s Singles Day also saw a big push into South East Asia, via Lazada, and India.
“Smaller brands might want to start to partner in a slightly different market such as somewhere in South East Asia (SEA) where these other markets are starting to open up and you can target them on a smaller scale to get your head around Alibaba’s Singles Day or other key shopping periods,” O’Connor says.
“We have got both Alibaba and JD.com pushing very heavily into SEA and we’re seeing the same thing happening in India, with the market is being pushed quite heavily at the moment in terms of the competitiveness with the Walmart acquisition of [Indian ecommerce business] FlipKart as well as pushes by Amazon and Alibaba into the market,” he says.
“There are some risks associated with pushing into these large sales events like SD but there is also a lot of opportunity that comes from it and we have a very distinct image in the Chinese consumer’s mind and our opportunity to leverage that is a huge opportunity for A/NZ businesses.
“We need to press for it and partner with these large businesses like Alibaba who are putting resource in to helping our local organisations sell into China.”
