Market Insight

How to read smartphone sales of Single’s day this year in China: Xiaomi tops the ranking; Apple, OPPO and Vivo are on the rise

November 29, 2016


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Double 11, or the Single's day, is a made-up festival in China, first by university students in early 1990s to entertain and celebrate singlehood and later promoted by China's e-commerce giant Alibaba as an online shopping event in 2009. It soon became one of China's biggest shopping days. Later other companies joined, including Alibaba's rival, JD.com, which started as an e-commerce website specialised in electronics.

Double 11, as the name suggested, takes place on 11 November every year. Alibaba has published the best-selling smartphone brands and models on the Single’s day: 

  Top selling brands Top selling models
Ranking 2016 2015 2016 2015
1 Xiaomi Xiaomi iPhone7 Xiaomi Redmi Note2
2 Apple Honor(Huawei) Xiaomi Redmi 4A Honor 5X
3 Honor(Huawei) Meizu iPhone 7 Plus Meizu metal
4 OPPO Apple Honor 6X Xiaomi Redmi 2A
5 Meizu Qiku Honor 5 iPhone 6s
6 Huawei LeEco OPPO R9s  
7 ZTE OPPO Xiaomi Redmi  
8 LeEco Lenovo Xiaomi MIX  
9 Vivo Smartisan Honor 8  
10 Samsung Newman Xiaomi 5s  
 

Our analysis:

Although offline retail takes up 75% of the total smartphone sales in China, online channels are still important

It reflects consumers' choice under lower degree of information asymmetry. The discounts range from CNY 20 to 300 (USD 3 to 44) which are not strong incentives hence the sales figures are not likely to be a result of impulse buying. As online-shopping gains popularity, more consumers will consider e-commerce when buying smartphones, especially in less-developed part of China where represents a great potential of growth. This may change the overall picture of China's smartphone business as some OEMs are more successful in online channels such as Xiaomi.

Double 11 has a particular importance for Xiaomi as the company started off with the online channel predominantly and has thrived on online flash sales. E-commerce is a key part of the brand image. Since 2013, when the company first joined Double 11, it has always been at the top of rankings.

This year is difficult for Xiaomi because it has posted negative year-on-year growth for two consecutive quarters and is pushed out of the top five league by OPPO and Vivo in global shipment volumes. Under such pressure, at this year's Double 11 Xiaomi has put forward Redmi 4 as the fighter phone which costs only CNY 499  (USD 72)  in order to retain the number one position. Also, to fight off the competition from OPPO and Vivo, Xiaomi is looking to build up retail channels in various locations in China, in particular tier three and four cities in which e-commerce is less popular.

OPPO and Vivo are moving up on the Double 11 smartphone ranking

OPPO and Vivo are the recent rising stars among Chinese OEMs as they have grown both in  sales and market share. 2015 and 2016 have witnessed explosive growth for the two OEMs which started from the same parent company, BBK. The triumph of OPPO and Vivo is clearly at the expense of other OEMs, notably Xiaomi. IHS believes the success is driven by aggressive marketing as well as their effective retail channels inherited from BBK. 

Online retails had never been a strength for these two OEMs. However, at this year's Double 11, both OPPO and Vivo moved up on the ranking despite only running small promotions. OPPO claims its revenue generated from this year's Double 11 has increased over 100% compared with last year. This signals the two OEMs have finally increased brand awareness among the online-shoppers which are different from their traditional audience group thanks to their marketing spend.

IHS believes OPPO and Vivo will maintain a strong foothold in China with using the growing popularity of e-commerce. Their advantage of a vast offline retail network guarantees smoother customer interaction and consumers may prefer to go to a physical store over virtual helpline if in need of custom service support.

Apple did well without putting promotions on iPhones

Apple has posted negative growth for three quarters in a row this year. It is the first time in history that the company sees annual negative smartphone unit shipments growth in fiscal 2016. The lack of success for the iPhone 6s and 6s Plus in China is one of the causes of this decline because China was a key source of the company's revenue previously: in 2015 China has generated 26% of Apple’s total revenue.

Although Apple does not reveal actual iPhone sales volumes on Double 11, last year iPhone 6s ranked the second on Alibaba and third on JD.com; 6s plus claimed number five on Alibaba and ten on JD.com. This year iPhone 7 and 7 plus are listed first and third on Alibaba, and first and second in the above-CNY 4000 (USD 580) category on JD.com. Despite negative publicity around the iPhone 7 range, it has performed well on Double 11 in China.

It is the first time that Apple engages in marketing activities on Double 11 even though it has had a self-owned store on Alibaba for a while. Other retailers on Alibaba or JD.com sell iPhones with different promotions but Apple itself chose not to offer any discounts for iPhone models on Double 11 bar accessories.

But, by comparison, it's noteworthy Apple did offer discounts on iPhones for Black Friday 2016 in the US, UK and in a number of other countries. Given Apple’s recent poor performance in China, Apple has the option to extend the promotions on iPhones but prefers not to. The company may be testing the water with accessories this year and we may see iPhones on sale at Apple's self-owned store on future Single's day.  

The higher ranking of iPhone 7 and 7 plus this year has demonstrated the popularity of iPhone 7 range over the 6s. However, this success is likely the outcome of iPhone buyers' purchasing habits, as they may tend to buy iPhones through official channels, such as reliable retailers or Apple's own stores. The opening of Alibaba Apple store has offered a new channel option for potential Apple iPhone buyers in China, hence the better sales of iPhone 7 and 7 plus on Double 11 through this new way to buy.  

Single’s day is more of a marketing event and a testing ground for smartphone OEMs

The sales figures are allegedly inflated by automated bots. For example, Xiaomi has been questioned by its competitors that the numbers are not authentic. Equally importantly, the so-called Double 11 sales often include sales accumulated from a few weeks prior and from a few weeks after Double 11, as consumers tend to compile their shopping list for this single day.

Nonetheless, Double 11 has value for OEMs as the promotional event is a good opportunity to boost brand awareness and market their latest models because Double 11 draws so much attention and press coverage. It is also a testing ground for OEMs to see which models sell well, and which don't, as buyers are given a higher quantity of information through the Internet than other channels. In addition, e-commerce provides a great platform to collect customer feedback as Alibaba and JD.com has trained Chinese customers to leave reviews. Smart OEMs use the results of Double 11 to build on for future marketing strategy in China.

Geography
China
Organization
Apple Inc. Vivo Xiaomi
Category
Mobile Devices
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