Sales bonanza will not boost economy

Staff members of Tmall, a business-to-consumer marketplace of China's biggest e-commerce platform Alibaba, cheer for rising order volumes in Hangzhou, capital of East China's Zhejiang province, Nov. 11, 2013. [Photo/Xinhua]

The online shopping sale on Nov 11 has been put in the spotlight with analysts keen to find solid evidence of improving consumer demand that might bolster the slowing economy.

Unfortunately, the prospering e-commerce industry can hardly solve the problems facing the economy on its own.

China's e-commerce giant Alibaba Group Ltd launched the online Singles' Day sale in 2009. Since then, the date, made up of four lonely "ones", has become the world's biggest online shopping event.

The expectations are this year will be another bonanza and set a new sales record, which has ignited hopes that online consumption can at least partially offset the downward pressure on the economy from falling investment and exports.

A closer look at the event, however, shows such hopes are unrealistic.

The soaring sales on Singles' Day are actually a "sales overdraft" that results from the sudden release of consumers' pent up demand. Many people opt not to make planned purchases days or months ahead of Nov 11 hoping to benefit from the promotional discounts offered that day, and sales generally fall sharply after the event.

There is yet no evidence to support the notion that the contrived shopping spree provides a real boost to the country's overall annual consumption.

In reality, for many brands it represents a marketing opportunity rather than a means to significantly increase their annual sales. Some dishonest online retailers even use tricks to avoid offering real discounts in a bid to deceive buyers into thinking they are getting a bargain. For example, they may raise prices in the run-up to Singles' Day before announcing "big discounts" for Nov 11.

Previous Page 1 2 Next Page

Previous Page 1 2 Next Page