Lunar Capital | 2016-11-30
As we enter the year-end holiday season, the world’s two largest economies will generate tremendous levels of shopping both online and offline, bringing the sheer scale of China’s consumer growth into sharper focus.
Double 11 – The online Chinese consumer is as healthy as ever
Sales during November’s “Double 11” promotion reached 120.7bn yuan, or US$18bn, up 32% YoY. Chinese shoppers were enticed to build their shopping carts early, and in return were promised discounts and lightning-fast delivery. The first Double 11 order on TMall was received 13 minutes after the purchase was processed online.
In the USA, an impressive US $3.34bn was sold during Black Friday, with Cyber Monday generating US$3.45bn in sales. Together they total less than 40% of what Double 11 achieved in a single day. Again - less than 40%. Moreover, 80% of Chinese purchases were made via mobile phones, compared to approximately 32% for US consumers.
We believe these numbers will continue to rise, even from such a staggeringly large base. China and the United States are both consumer societies and we are seeing Chinese express individually, spend savings and seek out a better life through shopping. China also has room to grow by tapping into less urbanized and rural customers. During our recent AGM, Alibaba executives discussed their plans to bring an additional 500 million rural Chinese online through mobile phones, regional drop-centers and better logistics.
Lunar brands performed in all categories
Our Yeehoo babywear was the clear market leader. Yeehoo staffed more than 1,150 workers across three 8-hour shifts to ensure that orders were fulfilled and customer satisfaction remained high. Our snack food businesses, Yonghong and Yao Taitai, also showed strong growth, showing that strong traditional brands can tap online channels for new growth.
The uplift from e-commerce and the strengthening economy overall should make for a strong year end. The middle class continues to rise, consumption grows, policies are favorable and a weakening RMB probably is having a stimulative effect.
We look forward to updating you in more detail at year-end.