Alibaba's Singles' Day sales: Are the Indian and Chinese e-commerce sectors like apples and oranges?

Chinese e-commerce giant Alibaba sold a record $30.8 billion worth of products on its 24-hour Singles’ Day sale.

The numbers were 27 percent higher as compared to the $24 billion of gross merchandise value (GMV) of sales last year.

Even though China is facing major geopolitical and economic challenges, the story on Chinese middle-class consumption on November 12 was different altogether.

Last month, India also had one of its biggest online shopping festivals, but reported a fraction of this number at $2.3 billion during five-day period.

What got Alibaba to achieve the $30.8 billion GMV target in 24 hours is the trust placed by the Chinese consumers, the consolidation of online and offline retail, the categories of products, the income and expense of the Chinese consumers and others, according to the analysts.

While we can say that both China and India have almost the same population size, it will not be appropriate to compare the size of online e-commerce market of China and India.

“China’s online e-commerce market was between $900 billion to 1 trillion in 2017 whereas India’s e-commerce market was around $18-20 billion. There is a significant difference in size of the market in both countries,” said Ankur Pahwa, Partner and National leader, E-commerce and Consumer Internet, EY.

Income and consumption power plays an important role for a consumer. “The economies of China played an important role in the spending habits of the Chinese. The GDP per person in China is around $9000 whereas in India, it is around $2000,” said Pahwa.

Devangshu Dutta, Chief Executive of Third Eye Sight said, “I don’t think it is right to compare India with China. There is a huge difference of consumption and profiling in both the countries.”

But what lessons should other e-commerce platform learn from Alibaba?

Trust plays a very important role in an online e-commerce market. Alibaba , with its closed ecosystem, has developed trust with its consumers. Indian e-commerce still lags behind on this factor.

“Quality and trust played a very important role for Alibaba in China. Also, a large part of the Chinese economy is virtual. Whereas in India, a majority of buying is still from offline,” said Pahwa.

Alibaba said that more than 40 percent of consumers made purchased from international brands.

“Indian e-commerce should give a mix of categories to its consumers. Proper curation of the inventory should be there in order to target Tier 2-3 cities. Another lesson one can learn from Alibaba is the dealings with the brands,” said Pahwa.

Alipay plays an important role for Alibaba. “Alibaba has integrated all ecosystems in its e-commerce business. From Alipay to its logistics. It has provided qualitative and seamless experience for its consumers,” said Pahwa.

Online and Offline markets

“Alibaba has consolidated both business and consumer side in the Chinese economy. Whereas India still has a fragmented consumer market. Though the supply side of the Indian market is consolidated,” said Dutta.

He added, “Alibaba has consolidated its hold on both the business and the consumer side in the Chinese ecosystem. India still has a fragmented consumer market, and online retail is only a couple of percentages of the total market, though the supply side is consolidated between the two foreign-owned businesses, Flipkart Group and Amazon. In India, I think both online and offline formats need to evolve together.”

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