Who knew Black Friday online sales were so big in China?
Black Friday online sales last year reached $6.22 billion in the US, growing an estimated 23.6% from the year before. But unbeknownst to most Americans, Black Friday has become an increasingly important holiday in China as well.
Products ‘Made in the USA’ have grown in popularity among affluent consumers in the biggest retail market in the world.
We explain why and how American retailers and brands can take advantage of this annual sales event to expand their reach with online sales to consumers in China.
Black Friday was Popularized by Alibaba
Over the past few years, Alibaba has turned Black Friday's online sales into a bonanza for discounts on imported products – specifically cross-border e-commerce products that are shipped directly to the consumer under a special customs clearance channel.
Such a channel exists because general trade regulations make it difficult for certain categories of goods to enter the market, including cruelty-free cosmetics, quality milk powder, health supplements and protein powder, organic foods, etc.
During last year’s Black Friday, categories in demand in China were dental care items, as Chinese consumers are paying more and more attention to their dental health than in the past, when dentists were few and far between.
Most US brands operated under the new Tmall Overseas Fulfillment program, which lets smaller brands store inventory in US-based Alibaba warehouses for more efficient, coordinated delivery. Top brands include Evereden, a baby skin care brand. Many Chinese consumers look to the US for personal care and skin care products because they believe they’re higher quality and contain fewer skin irritants than cheaper Chinese competitors.
Black Friday festivities in China have also spread to other platforms such as JD.com’s JD Worldwide platform, Kaola, and other niche retailer sites such as Feelunique, which sells imported cosmetics from the UK.
During last year’s Black Friday, JD.com customers spent time searching for protein powder, facial masks and diet products. Chinese consumers often actively search for American nutrition and diet brands such as GNC and SlimFast. In addition to these categories, other growth categories were health supplements, electronics, and personal care products.
Why Black Friday Makes Sense for American Brands in China
Brands participate in Black Friday promotions because the customers are higher quality and tend to spend more. These customers are frequent haitao shoppers, meaning they embrace cross-border e-commerce, and are on the lookout for imported brands. Many customers tend to be females in affluent Tier 1 cities, aged 25-35.
In comparison, China’s annual Singles Day created by e-commerce giant Alibaba is the biggest retail event in the world, which takes place on Nov. 11. Singles Day is popular for general e-commerce, so American and foreign brands have to compete with domestic Chinese brands on platforms such as Tmall and JD. Traffic acquisition costs are more expensive and the amount of ad space you can bid for is also limited. Not to mention, retail companies face intense pressure to provide heavy discounts, as that is how Alibaba allocates website space to your brand on the main pages.
In short, there is less competition on Black Friday, so American retailers and brands looking for higher ROI might want to focus their efforts on this holiday rather than Singles Day.
How Should Brands & Retailers Prepare for Black Friday?
Brands should apply for promotion space with the relevant platforms. Chinese e-commerce platforms such as Tmall will showcase brands and promotions during big e-commerce holidays to encourage people to spend and fill up their shopping baskets. The upside is that brands do not have to pay for this website space, but the downside is that they may be asked to discount their products discriminately. Brands will have to exercise their negotiation skills to achieve a mutually beneficial outcome.
Brands should stock high-turnover inventory in advance, and consider moving them to closer warehouses in Hong Kong or China free trade zones. This is especially the case for smaller players with fragmented supply chains, as it’s common for them to run out of inventory when they come to China for the first time. Moving products to a closer storage location allows for faster delivery and better customer experience. Supply chain issues are some of the key reasons why customers don’t come back, so proactive planning is essential.
Make sure that your IT infrastructure systems can handle surges in user traffic and demand. There have been many cases in which websites will crash on the big day and remain offline for several hours. Conduct stress tests and make sure that all of your servers and equipment can handle the uptick in traffic. The worst thing to happen is for a customer to come to your website, only to find that it’s not working and they can’t make any purchases.
- Black Friday is a popular e-commerce holiday in China among cross-border e-commerce consumers looking for quality American products. Top categories include cruelty-free cosmetics, health supplements, and mom and baby products such as quality milk powder.
- Black Friday sales may be a good way to target a smaller, higher-quality user base. The competition for traffic and attention is lower than that of Singles Day, and the customers are more likely to be loyal to your brand in the long run.
- There are a few things that brands can do to maximize success on Black Friday. Brands should negotiate for promotion space with the big e-commerce platforms. They should also make sure that their supply chain operations and IT infrastructure are in order and ready to handle large surges in orders.