The International Shopping Olympics: How 11.11 drives local payments

Singles’ Day began on Chinese university campuses in the mid-1990s as an anti-Valentine’s Day for singles. Now 11.11, or Double 11 as it is known, is a USD 30 billion global shopping festival, says Alibaba. It’s now bigger than Prime Day, Black Friday, and Cyber Monday combined. PPRO has been facilitating local payment schemes on behalf of Alipay for the last 5 years.

More than just a Chinese shopping festival

11.11 was popularised by the Alibaba Group in China in 2009 to raise awareness of online shopping in the quiet period between Golden Week, a Chinese public holiday, and Christmas. Just as Black Friday has become more popular outside the US, 11.11 is becoming an event for shoppers outside China to bag bargains online from well-known international brands like Nike, MAC, and more.

Customers outside China primarily shop on the AliExpress website, one of the Alibaba Group brands, but international retailers can sell on many Alibaba Group platforms. In fact, retailers such as Adidas, Apple, Dyson, Estée Lauder, L’Oréal, Nestlé, and Nike were among the 237 brands that exceeded RMB 100 million (USD 14.4 million) in sales during the 2018 event.

Retailers both inside and outside China also now piggyback on the event’s success by offering promotions on their own websites to coincide with Alibaba’s 11.11 Global Shopping Festival.

Sales settled through Alipay, the in-house payment service provider (PSP) for the Alibaba Group, were RMB 213.5 billion (USD 30.8 billion) last year, an increase of 27% in 2017, according to the China profile in the PPRO Payment Almanac . As expected from a country with an online population of around 735 million , 11.11 is a big deal in China. Yet the customer and merchant base are becoming more international and the event more global. Last year, an astonishing 40% of sales went to international brands. And with Alibaba’s 2019 objective of 100 million new users, it will be interesting to see the results this year.

How to prepare for the biggest shopping event of the year

PPRO is the world’s leading local payment platform and has been a strategic partner of Alipay since 2015. During the last 11.11, Alipay was at, one point, processing more than 256,000 payments a second. It’s fair to say that anyone participating can expect 3-4 times their normal volume. Our preparations for peak season go on all year as part of business-as-usual development and maintenance.

Ensure that your systems can process an expected number of transactions per second and ensure DDOS limits are adjusted ahead of time. And that they can cope with transaction waves as various mini campaigns run during the two-day 11.11 event. Test and re-test connections with schemes, partners, banks, ISPs and others to ensure there’s a back-up to every component and no single points of failure.

Technical development freezes in your live production environments ahead of 11.11 are helpful to minimise bugs. These may cause issues that lead to downtimes during peak trading. Notify sub-schemes and bank partners of any freezes and request that they also refrain from all but essential systems maintenance to maximise uptime.

Open lines of communication, clear escalation points and transaction monitoring during the event are also a must.

Our predictions for 11.11 this year

We don’t have a crystal ball. But for 2019, we expect 11.11 to become an even bigger global event. More international consumers will shop online on that day and in the run-up to Christmas.

However, while consumers may be happy to shop internationally, the way they prefer to pay remains a local affair. In Europe, card payments account for only 40% of online payments; consumers prefer bank transfer and e-wallet payments. Across APAC, e-wallets tend to dominate the payment preferences. Only offering traditional card schemes will exclude billions of potential new customers. 

The percentage of ecommerce conducted on a mobile device ranges in Europe: 15% in Austria, Belgium, and Poland and up to 40-45% in the Czech Republic, Germany, and the Netherlands. Look East and these figures rise to almost 90%! As local payment methods optimise their mobile checkout flows and generate buzz with 11.11 marketing campaigns, this will lead to even stronger growth in 2019.

The presale festival is reaching fever point, and Taylor Swift is kicking off the Gala event in Shanghai this weekend on Sunday night. It’s safe to say that consumers, retailers, payment providers, and other financial institutions are going to have a big day. How big? Well, we’ll have to wait and see.

Tristan Chiappini is VP, Head of Partnerships, APAC at PPRO, a specialist for local payment methods (LPMs) and value added services, with offices worldwide. He joined the company in 2016 as Head of Account Management and is now taking over the responsibility for PPRO ́s business in the APAC region. Tristan has over 10 years of experience in the payments industry and with his excellent understanding of the Asian market, he will support PPRO´s approach to globalise the company and to create the world´s leading global platform for local payments.

About PPRO

PPRO enables integrated electronic payment processing on a global scale spanning the entire payments value chain from acquiring through processing, collection and settlement. PPRO acts as a B2B payments hub, connecting PSPs and other merchant aggregators, such as acquirers and processors, with local payment methods.