US Black Friday VS. China Singles’ Day: Why Differ So Much?

China’s voracious appetite for online shopping is perhaps best shown by the billions of dollars spent online in minutes on Singles’ Day. But the Black Friday shopping frenzy in the US plays out very differently, with consumers elbowing each other and even getting into fights in their attempts to grab heavily discounted flat-screen televisions or Xbox gaming consoles in stores like Walmart.

How the world’s two best-known shopping events play out highlights not just the sheer spending power of Chinese shoppers and general consumer sentiment amid growing economic uncertainty in an escalating US-China trade war, but also the major differences in retail ecosystems in the top two economies.

Black Friday, the day after Thanksgiving, often marks the start of the holiday shopping season and counts as one of the biggest shopping days in the US. For decades, retailers would begin advertising holiday sales from Black Friday, offering shoppers discounts on their Christmas shopping. Last year, some 77 million shoppers went to physical stores to shop on Black Friday, with consumers spending about US$5 billion online, according to a joint National Retail Federation and Prosper Insights & Analytics survey in the US.

image credit: internet

That stands in stark contrast with China, where the biggest shopping day for the world’s most populous country happens almost exclusively online. The annual November 11 Singles’ Day sale across Alibaba’s e-commerce platforms racked up US$30.8 billion this year, topping records and dwarfing online sale numbers of Black Friday and Cyber Monday combined.

China’s online-driven shopping behaviour stems largely from a leapfrogging of organised retail, where chain stores – like supermarket or hypermart chains – sell goods to hordes of consumers.

The game-changer for China came in the form of the internet and the rapid adoption of mobile phones, which helped to train an entire generation of increasingly affluent consumers to buy online, as compared to the US where people have shopped in bricks-and-mortar stores for generations.

Today, the Singles’ Day numbers from Alibaba are of such sheer scale that the annual one-day shopping event is widely seen as a benchmark for consumer sentiment. Its growing transaction volumes each year also illustrate China’s shifting consumption demographics, which include the growth of a rising middle class and the emergence of the big-spending millennial consumer.

A recent report on retail identified China as an ecosystem that is primarily led by online players, with consumers leaning towards making online purchases. In contrast, the retail ecosystem in the US is still largely led by offline players, who are inclined towards encouraging e-commerce on their own platforms.

But US retailers, who have long relied on bricks-and-mortar shopping, are now also struggling to keep their physical retail stores profitable even as they beef up their e-commerce offerings as consumers shopping habits gradually shift online.

image credit: internet

Research indicates that while Black Friday is still a popular day for physical shoppers, with retailers still earning the bulk of their revenue from in-store purchases, physical retail sales on the whole have been slowing down. Large retailers, such as Macy’s and Sears as well as brands such as J.C. Penney and Guess, have shuttered stores across the country as consumers turn to e-commerce for the convenience of shopping in their own homes.

“American retailers are still struggling to even achieve omnichannel retail, as compared to Chinese retailers which have great support from Alibaba and other large e-commerce platforms,” Tiffany Lung, analyst at retail innovation and technology solutions company Tofugear, said. “These players believe in integrating online and offline retail to achieve a holistic, unified commerce approach.”

Analysts have pointed out that big e-commerce players like Amazon will continue to dominate sales for Black Friday and Cyber Monday in the future, especially as retail continues to shift online.

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