(Yicai Global) Nov. 21 -- The city of Yiwu, known as the "world's largest wholesale market for small commodities," recorded a turnover of USD1.23 billion (CNY8.13 billion) of e-commerce transactions on Singles' Day this year, up nearly 60 percent annually.
The turnover on Taobao and Tmall on Singles' Day hit CNY6.097 billion, contributing 3.62 percent of that day's CNY168.2 billion turnover, and the turnover on other e-commerce platforms such as JD.com Inc. [NASDAQ:JD] is around CNY2.1 billion, per Yiwu E-Commerce Office data. Merchants made 1.2 million deals through Alibaba Group Holding Ltd.'s [NYSE:BABA] cross-border platform AliExpress in the city on the same day. From the perspective of the consumption scale, Yiwu ranked second among county-level cities nationwide, behind only Jiangsu province's city of Kunshan, per Alibaba's national consumer rankings.
Developing Physical Stores, E-Commerce
More than 100,000 shops in Yiwu participated in the grand event on Singles' Day this year. Some 3,800 of them traded on Tmall, an affiliate of Alibaba, up 8.6 percent annually. Sectors including apparel, shoes and hats, and knitwear performed well on Singles' Day this year with a gross turnover of CNY345.6 million, followed by sectors such as daily necessities, furniture, cosmetics, and sports and entertainment products.
The Yiwu government implemented a policy to promote e-commerce market in 2013 in response to industry trends. Yiwu rapidly became the largest county market in China in terms of the e-commerce trading volumes on the back of rapid market growth. It became the only county-level city to receive approvals to become a national-level e-commerce demonstration city. More and more merchants in the Yiwu international trade city have started to employ online platforms such as Yiwugou, Alibaba's Taobao and JD.Com. By last year, the city had more than 250,000 registered e-commerce accounts on various platforms, achieving turnover of about CNY177 billion on e-commerce transactions. The development of Yiwugou relies significantly on the physical market, different from most e-commerce platforms in China. Most online shops have a corresponding physical presence to realize synchronized sales both online and offline and to generate more profits through multiple channels.
Special delivery boxes are scattered everywhere throughout the city ready to be delivered to destinations nationwide. Yiwu dealt with 20.58 million items for delivery on this year's Singles' Day, an annual increase of 90 percent. The special delivery index recently released by Yiwu for the first time indicated that in the first three quarters of 2017, the volume of special deliveries in Yiwu reached 1.21 billion, up 73.2 percent annually and its income amounted to CNY8.35 billion, up 71.3 percent with growth being higher than the national averages by 43.4 and 44.6 percentage points, respectively. The volume accounted for 23 percent of all special deliveries in Zhejiang province, ranking second, and accounting 4.4 percent of total national deliveries, ranking sixth.
Yiwu has boosted both the rapid development of domestic retail and the steady advance of cross-border e-commerce.
With the One Belt, One Road Initiative, more and more countries hope to agree economic and trade cooperation with China, and Yiwu has also taken this opportunity to initiate the only privately-owned China-EU train in China called the Madrid-Yiwu Train to connect Yiwu, the world's supermarket, and Madrid, the largest distributing centre for small commodities in Europe, bringing new opportunities to small- and medium-sized enterprises in Yiwu.
Yiwu has witnessed rapid growth in the turnover of cross-border e-commerce, withCNY5.05 billion, CNY35.1 billion, CNY43.3 billion, CNY58.2 billion and CNY65 billion in 2012, 2013, 2014, 2105 and last year, respectively, per Yiwu E-commerce Office data. Turnover of cross-border e-commerce from January to September 2017 totaled CNY52.44 billion, an annual increase of 17.48 percent.
Cross-border e-commerce allows the sellers to directly serve buyers through online e-commerce platforms, reducing many intermediary sales links, lowering the terminal sales price and enhancing price advantages, which is the largest difference between cross-border e-commerce and traditional foreign trade. The development trend of cross-border e-commerce has also driven rapid growth in related industries, such as the express and logistics sector. There are hundreds of courier companies operating in Yiwu, and multiple renowned courier brands have set up branches or offices in Yiwu.
Driven by the One Belt One Road Initiative, Yiwu's cross-border e-commerce is also actively bringing in foreign commodities while allowing Chinese commodities to go global.
The 100,000-square-meter Yiwu International Trade City Imported Goods Museum is currently China's largest one-stop exhibition and trade center for imported daily consumer goods, bringing together 100,000 featured products from more than 100 countries and regions. Commodities include food, alcohol, clothing and footwear, daily necessities, household items, kitchen supplies and handicrafts.
Leveraging Big Data, Yiwu Index Reflects Market Changes
As internet technologies flourish, Big Data and cloud computing have been widely applied to various fields, and various industries to expand business to provide consumers with better services.
Yiwu's residents realized the importance of Big Data as early as ten years ago. October 2006 witnessed the official release of the Yiwu China Commodity Index (Yiwu Index) which is composed of price, climate and monitoring indexes and fully reflects the Yiwu commodity market from different aspects. Given that the concept of a professional market index was still in its fledgling stages in China at that time, the Yiwu Index became known as China's Dow Jones for global commodity prices and a barometer of domestic commodities, impacting trends in global commodity prices and constituting an important value for economic analysis.
According to monthly export data from Yiwu in September 2017, Asia beat other continents as the top export destination globally accounting for 38.53 percent of exports, followed by Africa (23.38 percent). Exports to South America were second only to those to Europe. Yiwu's exports to Asia gradually fell in the second half of 2017, declining nearly 16.4 percent annually, while those to Europe, southern Africa, and North Africa showed constant growth. Foreign trade orders in the Middle East, Latin America and Third World countries remain vulnerable to local political situations. Yiwu merchants' exports have gradually shifted to European and Australian markets, as well as other developed countries, demonstrating the great potential of overseas markets.
As the Yiwu Index's sub-indices show, export prices of Yiwu commodities have increased slightly year by year. With the rapid rise of factor costs in China, prices of labor, raw materials and other factors are also on the rise, and the comparative advantages of commodity prices in the city are gradually decreasing.
At a time when prices are no longer absolutely competitive, clever Yiwu merchants are also striving to make the transition, placing a greater emphasis on the strategic individualization and customization of products.
Fidget spinner toys became popular in the Yiwu market in March. Buyers looked for sources everywhere, but the toy was still in short supply despite manufacturers' expenditure of extra resources for production in line with buyers' demand. Increased customized products such as fidget spinners and the smart toys emerging on the Yiwu market reflect the tremendous power of Yiwu manufacturing sector and the constant pursuit of citizens to create. To adapt to various export standards and enhance market competitiveness, many enterprises have attached greater importance to quality, design and innovation in their products.
Yiwu exports few well-known international brands and it mainly occupies mid- and low-end markets. Internet-based personalized customization and creation of niche brands may be a key opportunity for the market. Whether it is due to Yiwu merchants' responding timely to fluctuations in the Yiwu Index or their innate business intuition, the existence of the Yiwu Index always enables people to understand better their guidelines and possibilities.