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Business trends

Alibaba, online retailers eye Southeast Asian growth on ‘Singles Day’

12.12 and Black Friday give 11.11 a run for its money in Indonesia, Vietnam

Shopee is touting savings of up to 90% and throwing in free shipping for Singles Day in 2019.   © Dylan Loh, Nikkei Singapore Bureau

SINGAPORE – Chinese e-commerce giant Alibaba's Singles Day, the annual celebration of unbridled consumerism on Nov. 11, has a firm grip on Malaysia and Singapore, but less so in neighboring Indonesia and Vietnam, data released by online advertising solutions provider Criteo shows.

The event – held on 11.11 because the date resembles single individuals when expressed in numerals –generated a whopping 418% spike in online retail sales for Malaysia last year, and a comparable 368% increase for Singapore. Other tentpole shopping festivals have not managed to empty wallets at the same pace in the two countries, according to Criteo.

For example,11.11's spinoff 12.12, held on Dec. 12, was created for smaller merchants to shine away from the spotlight typically on big players during Singles Day, and saw online retail sales jump 195% for Malaysia in 2018, and 92% for Singapore. Black Friday – the traditional peak shopping event in the U.S. – generated a 100% increase in online retail sales for Malaysia last year, and 114% for Singapore.

Criteo identified these trends through analysis of over 465 million online shopping transactions from 340 major advertisers in Southeast Asia, tracking sales  increases from 2017 to 2018 for tentpole e-commerce events. But it declined to reveal how the percentage increases translated in terms of dollar values, citing confidentiality agreements with its business partners.

Singles Day, which grew out of a day designated for single young people in China, has developed slowly into a major event on the retail calendar. For the 2009 event, Alibaba recorded gross sales on its platform of less than 100 million yuan ($14.2 million). But by last year, the company's haul from the 24-hour shopping event had soared to $30.8 billion.

Even with the ongoing U.S-China trade war, mobile marketing company App Annie projects Alibaba’s e-commerce event to rake in $37 billion in one day this year, fueled by digital spenders glued to their smartphones.

In Southeast Asia, the internet economy, chiefly driven by online shopping, is predicted to be worth $300bn by 2025 according to Google and Temasek's e-Conomy SEA research program.

While the Singles Day phenomenon has clearly caught on in Malaysia and Singapore, Criteo’s data suggests that 11.11 has some ways to go before mirroring that success in Indonesia and Vietnam. In those two countries, online shoppers appear to prefer 12.12 and Black Friday.

Criteo said 12.12 is the king of shopping festivals in Indonesia, Southeast Asia’s largest economy, generating a 389% uptick in online retail sales in 2018. Singles Day, by comparison, saw an increase in sales of 174% in the country. 12.12 is also known as ‘Harbolnas’ in Indonesia – a national online shopping day that has been instrumental in the growth of e-commerce in the country.

In Vietnam, Criteo’s data shows Black Friday as the lead tentpole shopping event, producing a 149% increase in online retail sales last year. 11.11, on the other hand, saw internet shopping rise by just 64%, with 12.12 prompting a 97% uptick – both failing to hit the triple-digit percentage spike enjoyed by Black Friday.

Pauline Lemaire, Director of Account Strategy for Southeast Asia, Hong Kong and Taiwan at Criteo, said influence from China’s No. 1 shopping event may not be felt as much in Indonesia and Vietnam.

“You’ll have some clients who are telling me they want to participate in absolutely everything, so every time there is an opportunity to have a promotional sale, they will promote themselves,” said Lemaire, explaining that retailers have opted to drive sales during alternative shopping festivals away from the glare of Singles Day.

Syfur Rahman, a Consumer retail analyst at Nasdaq ,said while 11.11 is expected to continue its run in driving ever-increasing sales for e-retailers, results across the region may vary due to differences in consumer access to the web.

“Countries like Indonesia and Vietnam have been lagging behind others in Southeast Asia because their internet penetration, which as of June 2019 stands at 64% and 70%, respectively, less than Singapore’s 88% and Malaysia’s 81%,” Rahman said.

Still, e-commerce players are gearing up to ring in year-end cash registers as 2019 draws to a close. Singapore’s Shopee, which has Portuguese footballer Cristiano Ronaldo fronting its campaign, is touting savings of up to 90%, and throwing in free shipping on over 111,111 items for 11.11 sales.

Online shopping platform Lazada, a subsidiary of Alibaba that operates in six markets in Southeast Asia, is dangling over $8 million in vouchers for consumers who participate in online games leading to Singles Day.

ShopBack, a cash rewards provider that offers rebates for consumers who spend online, is also testing the waters with ‘gamification’ of the build-up to Singles Day this year, and rewarding those who participate with vouchers.

“We decided that, in terms of being able to promote the different brands, promote the different propositions, we needed a more engaging lead-up towards 11.11,” ShopBack’s Chief Commercial Officer Candice Ong told the Nikkei Asian Review in explaining the move to encourage shoppers to engage in games.

Indeed, to continue racking up record-breaking sales, e-retailers may have to look beyond surface-level engagement with consumers, according to a recent study by Facebook and Boston Consulting Group.

The study surveyed close to 9,000 people across nine countries, including major economies in Southeast Asia, and found that consumers are influenced considerably by their interactions with merchants before letting go of purse strings.

Nearly 45% of those polled in the region said online conversations with retailers led them to their first e-commerce purchases, with getting additional information on products and negotiating on prices being the top reasons for chatting with web merchants.

Of those polled in Vietnam, 36% have shopped online through this form of engagement – termed conversational commerce – with 29% having done the same in Indonesia, and 26% following suit in Malaysia.

Conversational commerce is changing the e-retailing landscape in the region, according to Shiv Choudhry, Managing Director at Boston Consulting Group.

“Southeast Asia is currently experiencing rapid adoption rates, closely mirroring the evolution in China, where established e-commerce players are taking significant steps to adapt to this emerging market potential.”

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