China’s online shopping behemoth
Another record-breaking Singles Day saw a huge surge in cross-border payments using the Chinese online payment platform Alipay, highlighting the still-exciting global potential for online payments.
During this year’s splurge on November 11, consumers in 224 countries and regions used Alipay to purchase their goods online, with the number of cross-border payment transactions jumping 60 per cent from last year.
Around 80 per cent of transactions were made through mobile phones, and sales worth RMB 122.7 billion ($17.8 billion) were made over the 24-hour period.
Alibaba, Alipay’s parent, supported Singles Day by producing a major interactive television event, featuring famous Western sports and movie stars.
The support of prominent international brands will not have gone amiss either.
Although international companies were slow to attach their brand power in the early days of the shopping festival, Singles Day now enjoys support from brands such as Apple, Nike, and Macy’s, America’s biggest department store. While Singles Day can be compared to America’s Black Friday and Cyber Monday, it dwarfs these in terms of mobile payments.
Over the whole of 2016, Americans are expected to make mobile payments of $154 billion, which is only 6.5 per cent of the sales anticipated this year in China. By 2020, China is predicted to be processing RMB43.3 trillion ($6.3 trillion) in annual mobile payments.
This shift to mobile aligns with consistent changes to consumer behaviour over the last few years. It is becoming more and more crucial for businesses, including banks, to go digital.
A 2015 survey conducted by Boston Consulting Group, a management consultancy, found that more than 70 per cent of corporate clients identify digital capability as a key factor in determining the quality of commercial banks’ corporate banking services.
Alibaba CEO Daniel Zhang has described Singles Day as “a quirk of the Chinese Internet”. Not only has this quirk become an empowering event for China’s singles, with goods worth RMB10 billion bought in the first seven minutes of this year’s event, it has also become a symbol of Chinese consumers’ buying power.
It will be interesting to see how next year’s festival will be affected by greater competition for online sales, coupled with slower growth in internet users and companies registering to use Alipay. No doubt the online payment giant is already devising new gimmicks and promotions to meet the challenge.