A spate of analytical studies have been recently issued arguing that Black Friday, historically one of the biggest shopping days of the year in the US, is all but irrelevant. However, the general practice of one day a year set aside for a frenzy of retail consumption is still alive and well…in China, thanks to online juggernaut, Alibaba.
Every year on November 11, a deluge of Chinese shoppers descend upon the Alibaba website ready to take advantage of deep discounts and bountiful promotions. These consumers spend more on this one day than the American Black Friday and Cyber Monday combined. In fact, it’s not even close.
This year, early reporting indicates that Alibaba took in well over $3 billion in sales, more than twice the business done online last Cyber Monday in the US. Alibaba’s two main shopping sites, Taobao and Tmall, did a total of $160 billion in sales last year, surpassing the combined totals of Amazon.com and Ebay.
This brisk business is in stark contrast to the expectations this year for Black Friday in the US. According to a new study issued by CFI, a research form headquartered in Michigan, the prospects for retail this year for the iconic day are grim. The report, “Holiday Retail Spending Report 2013,” predicts that mere 21 percent of consumers plan to spend more on gifts than they did last year. The bulk of would-be shoppers reported they intend on spending less, guided by a spirit of frugality rather than holiday cheer.
But the survey also indicates that retailers themselves have contributed to the diminishment of Black Friday by beginning their holiday marketing campaigns much earlier. Forty-nine percent of retailers report they will roll out their holiday promotions by October 31, according to a study conducted by Experian Marketing Services. By then, more 25 percent of shoppers have already kicked off their holiday buying and another 23 percent plan to do a majority of it prior to the end of October. Nearly 61 percent plan to be done by Thanksgiving. This means retailers can’t afford to procrastinate their major promotions until Black Friday.
The rise of e-commerce has changed the rules of the game as well. More than half of the much sought-after millennials plan to do 40 percent of their holiday shopping online. Millennials, however, will still spend a lot less overall. About half of all baby boomers will part with at least $500 this year, while less than a third of millennials plan on being so generous. The generational divide has significance with respect to timing as well. Approximately 36 percent of millennials are aiming to shop earlier this year, with 30 percent intending to be have finished shopping by the conclusion of December. On the other hand, only a quarter of baby boomers are as eager to begin earlier and a paltry 19 percent expect to be done before the arrival of December.
This year is looking particularly rough for Sears Holdings, which announced plans to keep its K-Mart stores open for a record forty-one straight hours, starting at 6 a.m. on Thanksgiving Day. In response to the news, hundreds of furious would-be shoppers expressed their consternation on social media, calling the marketing ploy “heartless,” “shameful,” and “greedy.” The anger was ostensibly expressed on behalf of those workers compelled to work on Thanksgiving Day instead of joining their families. Some samples of Facebook channeled ire:
“Shame on you, Kmart. I will never set foot in any of your stores again.”
“I have family members that work in retail and because of greedy retailers like you, will not be able to spend the day with us.”
“Maybe Kmart should have shown they are thankful for their loyal employees and let them be with their families on Thanksgiving. I realize you are a corporation and your goal is to make money…but sometimes you need to show and prove that people are important, too.”
Alibaba’s success depends on advertising revenue, since it charges neither shoppers nor sellers who use its websites. It has become as ubiquitous in China as Google is in the US, part and parcel of computing itself. Atsushi Watanabe, consultant at T.U. Business Consulting Co., said, “It’s hard to find a Chinese internet user who has never used Taobao or Tmall.”
Although a determinate date has not been announced, Alibaba is planning a much anticipated IPO in the near future.