China’s huge Singles Day shopping festival to test logistics network
Greg Knowler, Senior Asia Editor | Oct 22, 2015 6:24AM EDT
HONG KONG — China’s logistics and courier services are preparing for Alibaba’s annual Singles Day online shopping frenzy on Nov. 11 that last year saw 278 million orders placed in just 24 hours and sorely tested the mainland’s distribution network.
The e-commerce giant this year expects the Global Shopping Festival, as it has been named, to feature more than 6 million products from 40,000 merchants, with over 5,000 international brands from 25 countries. It is an immense task to get the goods ordered online to the delivery addresses.
Paul Man, regional leader of North Asia for APL Logistics, said the sheer number of transactions created choke points along the distribution chain.
“Millions of small packages will have to be delivered in the week after that day, and I have seen photos of the huge piles of packages waiting for delivery,” he said at the recent TPM Asia conference in Shenzhen.
To ease the burden on logistics providers and courier firms, Alibaba has recruited tens of thousands of Chinese brick-and-mortar stores to participate in the annual event through omni-channel, or multi-channel, retailing.
The e-commerce giant this year expects the Global Shopping Festival, as it has been named, to feature more than 6 million products from 40,000 merchants, with over 5,000 international brands from 25 countries. It is an immense task to get the goods ordered online to the delivery addresses.
Paul Man, regional leader of North Asia for APL Logistics, said the sheer number of transactions created choke points along the distribution chain.
“Millions of small packages will have to be delivered in the week after that day, and I have seen photos of the huge piles of packages waiting for delivery,” he said at the recent TPM Asia conference in Shenzhen.
To ease the burden on logistics providers and courier firms, Alibaba has recruited tens of thousands of Chinese brick-and-mortar stores to participate in the annual event through omni-channel, or multi-channel, retailing.
Retailers are turning to omni-channel systems to integrate their mostly independent online and offline operations as their customers increasingly turn to PCs, tablets and mobile phones when they shop.
Jeff Zhang, Alibaba Group president of China retail marketplaces, told reporters that the company hoped to use the 11/11 festival to encourage brands and retailers to make the transition from traditional to omni-channel retailing by combining the strengths of the online and offline shopping experiences. Alibaba operates Taobao Marketplace and Tmall.com, China’s largest online shopping markets.
“Omni-channel retailing is one key underlying theme for this year’s 11/11 Global Shopping Festival, which also marks the first step in achieving the full integration of the digital economy and physical commerce,” Zhang said.
“For traditional retail businesses, this presents an opportunity to embark on omni-channel sales and embrace the integration of online and offline resources.”
Zhang highlighted the disconnect between traditional and online retailers that have developed separately, with different product offerings, pricing, levels of service and supply chains.
“Offline and online products have been cut off,” Zhang said. As consumers increasingly turn to Internet and mobile technology to shop, retailers need to “synchronize” their online and offline businesses through Internet technology, he said.
One of Alibaba’s goals for the 11/11 festival is the use of omni-channel solutions to reduce the time it takes to deliver goods that shoppers have ordered online.
Zhang said most retailers have separate supply chains to support their physical stores and their online stores. For example, they often have warehouses in many major cities to feed inventory to shops, but just one warehouse in all of China that supports e-commerce sales. That can mean limited product selections for online merchandise and slower delivery times, Zhang said.
To reduce delivery times during the high-volume festival — more than $9.3 billion in gross market value was generated during the 24-hour sale last year — Alibaba is deploying its logistics arm, Cainiao, which operates a smart logistics network that coordinates delivery companies and courier services throughout the country.
For the 11/11 festival, Cainiao will work with brick-and-mortar merchants to connect physical stores and warehouses with their Tmall shops. It will use technology that allows retailers to respond to orders placed on their Tmall stores by identifying the closest physical store or facility that has the purchased items in stock and alert Cainiao’s logistics partners to pick up the products and deliver them to consumers.
E-commerce companies such as JD.com, Amazon China, Suning and Yiahaodian have increased logistics investment to improve customer experience as they gain scale, according to a CLSA report published before last year’s shopping festival. JD.com has about 100 warehouses with a total area of 20 million square feet and its self-operated delivery system has extended to 1,780 counties and districts that cover 97 percent of e-commerce orders in China.
Alibaba is the dominant e-commerce player in China, with an 81 percent market share. The secret of its success, CLSA said, is its Taobao unit, the largest consumer-to-consumer platform, which has a 97 percent share of the market.
“With millions of manufacturers and SMEs eager to sell products online, Taobao’s free online-transaction platform is the “everything” store for more than 200 million active buyers in China,” the report stated. “Its scale creates an immense moat as the platform of choice due to its high traffic, strong brand, big data and technology advantage. Alipay, China’s largest online-payment system, has created a closed-loop ecosystem.”
Jeff Zhang, Alibaba Group president of China retail marketplaces, told reporters that the company hoped to use the 11/11 festival to encourage brands and retailers to make the transition from traditional to omni-channel retailing by combining the strengths of the online and offline shopping experiences. Alibaba operates Taobao Marketplace and Tmall.com, China’s largest online shopping markets.
“Omni-channel retailing is one key underlying theme for this year’s 11/11 Global Shopping Festival, which also marks the first step in achieving the full integration of the digital economy and physical commerce,” Zhang said.
“For traditional retail businesses, this presents an opportunity to embark on omni-channel sales and embrace the integration of online and offline resources.”
Zhang highlighted the disconnect between traditional and online retailers that have developed separately, with different product offerings, pricing, levels of service and supply chains.
“Offline and online products have been cut off,” Zhang said. As consumers increasingly turn to Internet and mobile technology to shop, retailers need to “synchronize” their online and offline businesses through Internet technology, he said.
One of Alibaba’s goals for the 11/11 festival is the use of omni-channel solutions to reduce the time it takes to deliver goods that shoppers have ordered online.
Zhang said most retailers have separate supply chains to support their physical stores and their online stores. For example, they often have warehouses in many major cities to feed inventory to shops, but just one warehouse in all of China that supports e-commerce sales. That can mean limited product selections for online merchandise and slower delivery times, Zhang said.
To reduce delivery times during the high-volume festival — more than $9.3 billion in gross market value was generated during the 24-hour sale last year — Alibaba is deploying its logistics arm, Cainiao, which operates a smart logistics network that coordinates delivery companies and courier services throughout the country.
For the 11/11 festival, Cainiao will work with brick-and-mortar merchants to connect physical stores and warehouses with their Tmall shops. It will use technology that allows retailers to respond to orders placed on their Tmall stores by identifying the closest physical store or facility that has the purchased items in stock and alert Cainiao’s logistics partners to pick up the products and deliver them to consumers.
E-commerce companies such as JD.com, Amazon China, Suning and Yiahaodian have increased logistics investment to improve customer experience as they gain scale, according to a CLSA report published before last year’s shopping festival. JD.com has about 100 warehouses with a total area of 20 million square feet and its self-operated delivery system has extended to 1,780 counties and districts that cover 97 percent of e-commerce orders in China.
Alibaba is the dominant e-commerce player in China, with an 81 percent market share. The secret of its success, CLSA said, is its Taobao unit, the largest consumer-to-consumer platform, which has a 97 percent share of the market.
“With millions of manufacturers and SMEs eager to sell products online, Taobao’s free online-transaction platform is the “everything” store for more than 200 million active buyers in China,” the report stated. “Its scale creates an immense moat as the platform of choice due to its high traffic, strong brand, big data and technology advantage. Alipay, China’s largest online-payment system, has created a closed-loop ecosystem.”
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