The Supply Chain Matters continues with our series of commentaries focused on the ongoing 2021 holiday fulfillment period with highlights of the globe’s singular largest online shopping event, that being the China Singles Day shopping festival that traditionally represents the kickoff of online holiday shopping.
Yesterday’s Singles Day event is headlined with mixed results and potential added concerns for upcoming holiday focused online shopping events. Increased government scrutiny over the country’s large online tech providers added to muted expectations and performance.
Alibaba, China’s online shopping and brand positioning platform reported that festival gross market value (GMV) sales for the 11-day event that culminated yesterday rose by 8.5 percent to the equivalent of $84.5 billion. That compares to prior year’s performances of double-digit growth each successive year, and somewhat below analyst expectations. Alibaba reported GMV of the equivalent of $75.1 billion and 26 percent year-on-year growth for the 2020 event.
Since this festival was first initiated in November of 2009, involvement has expanded within and outside of China. Alibaba rival JD.com reported festival GMV sales of the equivalent of $54.6 billion reflecting a nearly 29 percent annual increase. Alibaba’s Southeast Asia subsidiary Lazada once gain participated offering promotional deals for Indonesia, Malaysia, Thailand, Singapore. and Vietnam online consumers.
According to published reports from Reuters, CNN Business and The Wall Street Journal, more pronounced government oversight of private tech businesses cast a shadow to this year’s festival.
Reuters observed that the final hours were more toned down with Alibaba playing down its sales performance and instead touting the tech provider’s social welfare initiatives. Instead of hyping the rolling tally of online transactions, viewers and online participants were encouraged to help raise funds for planned elephant reserve in rural southwest China. The Chinese online platform provider has pledged to donate the equivalent of $15.6 billion to support the Chinese government’s “common prosperity” campaign.
CNN cited Citi analysts indicating that while this year’s activity missed expectations, “it was not entirely unexpected” given the level of competition, a tightening economy and softening consumer sentiment in China.
The Wall Street Journal (Paid subscription required) pointed to merchants indicating struggles as to whether to preserve sales or profits, either offering expected festival promotional discounting, despite higher costs and production delays, or smaller discounts.
Reportedly, two of China’s largest online platforms were quoting delivery of the latest smartphone models from Apple and Huawei Technologies of up to four weeks for delivery. Since these products are primarily assembled in the country, that lead time expectation does not bode well for U.S. and European online sales occurring over the coming few weeks.
Interviews with certain online consumers reflected that they expected that some ordered products would take additional time to arrive.
With the reported results of this year’s Singles Day, the question of how this translates to the upcoming Thanksgiving, Black Friday, Cyber Monday and Christmas holiday period is certainly one of continued speculation.
The U.S., and to some extent, European economies are faring better for consumer sentiment. Some retailers are indicating that they have adequate inventories in-hand to meet holiday demand, but the news of continued major port congestion and ship queues add some concern. The need to either preserve revenues or profits is a common challenge but larger retailers have the advantage of being able to address both needs. Not so for smaller or specialty retailers.
For product supply, there is a significant question mark for autos, smartphones, consumer and computing products with the ongoing semiconductor shortages. Certain apparel is expected to be in short supply as our toys.
All of this boils down to timing and execution on the part of retailers as well online and in-store consumers. Amid optimistic forecasts for double digit holiday sales growth in the coming weeks, the questions are what additional actions can retail and consumer goods supply chain management teams undertake to ensure that that limited and likely late arriving inventories can be best be optimized.
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