Monday, December 8, 2014

Black Friday: Black Ink or Black Eye?

Christmas shopping kickoff overshadowed by China’s ‘Singles Day.’

Holiday traditions just aren’t what they were in the good old days anymore. Black Friday, the day after Thanksgiving, recognized as the busiest U.S. retail shopping day of the year, fizzled in 2014, with sales down 11 percent from last year, said the National Retail Federation, a far cry from the four-percent increase they were projecting. This came despite deep discounting and heavy promotion by major chains. Perhaps the thrill of lining up for hours in freezing cold has worn off for shoppers, and the merchants kept pushing the start times forward, into sacred Thanksgiving dinner and football time.

But as Black Friday, and from early reports, Cyber Monday shopping as well, have declined in this country, with “doorbuster” deals available over longer periods, a new king of shopping days has risen in China. On Nov. 11, Singles’ Day, a single company, Alibaba Group, recorded over $9 billion in sales, smashing last year’s $5.3 billion record and this year’s $8 billion projection, just five years after the one-day shopping festival was created.

Alibaba’s $9.3 million in one-day sales compares to an estimated $2.03 billion total for U.S. etailers on Cyber Monday, still up an approximate 8.7 percent from last year’s figures. This highlights the increasingly robust Chinese e-commerce sector, as the world’s largest market flexes its retail muscle. Fully 43 percent of Alibaba’s Singles’ Day sales were placed from mobile devices, also outstripping the portion of U.S. mobile device orders.

One impediment to even faster sales growth on Singles’ Day is – wait for it – logistics. Chinese e-commerce firms struggle with delivery issues, particularly in the interior of the country, with slow, uncertain arrival times and damaged goods leading to consumer frustration. Inefficient regulation and decades of underinvestment in inland logistics infrastructure compound the problem. Employees push carts by hand through open-to-the-elements warehouses, and delivery trucks are often prohibited from carrying return loads.

So if your Roomba arrives a day late, try to be philosophical about it – and make sure your own supply chain has no weak links.

Kirk Shearer
800-989-0054 x103

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