In a previous blog, Supply Chain Matters shared comments regarding preparations and planning for the upcoming holiday surge customer fulfillment period in the United States and other regions. The reality though is that there is a more significant near-term online shopping event, that being the Singles Shopping Holiday across China.
China’s Singles Day is somewhat equivalent to Black Friday or Cyber Monday in terms of an online shopping event, but one-day volumes clearly surpass those of the latter. The event was conceived by students in the 1990’s as a mock celebration for people not in relationships, with a desire to give something to oneself. It traditionally occurs on the 11th day of the 11th month or Double Eleven, since when written numerically, November 11th represents “bare branches”, a Chinese expression for bachelors and singles. Chinese consumers literally save their discretionary incomes while researching potential purchases for months in anticipation of this event.
For the past two years, Supply Chain Matters has provided visibility to China’s Singles Day, particularly the country’s major online retailers in their planning and subsequent performance in handling literally billions of revenue focused orders in one day. The 2016 event logged total online retail sales approaching $18 billion, all in one 24-hour period.
Last week, Chinese media reported that online dominant Alibaba, and specifically the retailer’s logistics arm, Cainiao Network is in the process of operationalizing flagship automated warehouses to prepare for the upcoming shopping holiday that occurs in just three weeks. The initial flagship facility located in Huizhou city in Guangdong province has been equipped with a reported 200 automated guided vehicle robots which can process more than one million shipments per day. Upon viewing a picture of such AGV’s, they have a similar visual appearance to similar vehicles among many Amazon customer fulfillment centers. The AGV’s automatically bring inventory to order pickers and sorters. According to reports, Cainiao is planning to have upwards of five of such facilities operational by this year’s Singles Day.
Another Chinese media report focuses on JD.com, China’s number two online retailer which also has aggressive plans underway to prepare for the upcoming shopping holiday. Last week the online retailer announced a series of partnerships. One is with Tencent Holdings, operators of WeChat Pay, one of China’s largest mobile payment services as well as social media WeChat platform. According to reports, the partnership calls for JD.com to share its customer purchasing history with data on users of the WeChat messaging app and use artificial intelligence techniques to predict who may have interest in buying specific products.
JD also announced a partnership with Wal-Mart China calling for both retailers to merge their membership systems within China, so members can receive discounts and other customer benefits from both retailers. Further being unveiled is a new system that will allow JD.com to fulfill online customer orders reportedly using Wal-Mart physical inventories. Wal-Mart has roughly 400 stores across China and has a 10 percent equity stake in JD.com. Tencent currently hold a 20 percent equity stake in the online retailer. Clearly, JD is looking to compete directly with Alibaba for a larger share of Singles Day volume.
Thus, both of China’s dominant online retailers thus have rather aggressive planning underway for Singles Day, and both desire to gain more customer mind share and clicks. That includes in the case of JD.com more leveraged use of advanced technologies related to customer buying tendencies as well as sharing inventories with Wal-Mart’s China stores. Alibaba has its own customer intelligence and online payment capabilities as well as additional funding and deployment of automated logistics capabilities.
By mid-November, the retail industry will have the opportunity to observe how one of the world’s largest one-day online shopping events fares for 2017, along with the battle of two online dominants for customer mindshare. It could well be very insightful for the entire industry.
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