Retailers Are Seeking New Ways Out of Price War

Chinese consumers are still drenched in the national online shopping frenzy even when the Single’s Day has passed, and we are seeing new trends this year.

Online shoppers filled their virtual shopping carts with merchandise all over the world this year, which is a new trend we are seeing this year. With Amazon announcing the tailored Prime service for Chinese consumers in October, and Alibaba giving Tmall Global a bigger shot, it is serious that the shopping holiday is more in favor of cross-border eCommerce than last year, despite voices saying that the cross-border retail industry suffers from regulations.

This year’s Single’s Day (also known as Double Eleven) recorded 10 billion yuan of sales 6 minutes 58 seconds after the midnight bell rang, which is 5 minutes 30 seconds earlier than last year. Many shoppers stayed up late to complete the payment, worrying that if they postpone it to the next morning, their desired products would be running out of stock. This could be one of the factors that pushed the peak of sales earlier than last year. Retailers are also aware of the massive traffic accumulated from 23:00 to 01:00, and some brand even put out slogan saying that “we can only sell at this price for 30 minutes”, creating a sense of urgency.

Although a number of retailers and brands still sell at steep discounts, but their proportion is relatively small. It is a common knowledge that the top selling products have little margin or no and they serves as incentives to encourage customers to buy long tail products. Not to mentioned the risk that customers run off to another store that offers better deal package. For most retailers, good merchandising combined with an appropriate threshold for free shipping is the key to increasing sales.

Seeking new ways out of price war

The increased amount of sales and the popularity of overseas shopping are signs that Chinese affluent masses are upgrading their consumption, which are good news because the market volume is expanding and more brands will be able to find a niche in China. Yongming Zhang, CEO of Alibaba had told the public that low price will cease to be the only characteristic of holiday sales, while JD’s VP of Marketing expressed a similar idea that the customers will value more about brands, qualities and services.

Bodyguard Apotheke is a german online pharmacy that had entered the China market a few years ago. In contrast with most retailers, Bodyguard Apotheke did not offer crazy discount to boost sales, but the result is still remarkable — daily sales during Single’s Day campaign was 400% more than average. They contribute it to their grand portfolio of products that their customers can choose from. Their insistence on providing fine customer service and engaging regularly with followers on social media is also impressive.

Retailers should find their ways out of the price war and build up their strength by optimizing logistics, building brand awareness and providing better services. These are tested methods and would guarantee costs reduction and strengthen customer loyalty. And this would also be good news for the Chinese consumers as the quality of product and service will be sustainable.

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