Date
15 December 2018
A screen shows the value of goods being transacted at Alibaba Group's Singles' Day global shopping festival last Sunday. Apple was reportedly the top-selling brand in the mobile phone category. Photo: Reuters
A screen shows the value of goods being transacted at Alibaba Group's Singles' Day global shopping festival last Sunday. Apple was reportedly the top-selling brand in the mobile phone category. Photo: Reuters

Apple gets some good news from China

After a spate of negative reports recently, featuring topics such as rumored cuts in iPhone orders and fading luster in the Indian market, there is finally some good news for Apple.

In China, Apple’s second largest market by revenue, iPhones turned out to be a surprisingly hot commodity during the Singles’ Day shopping festival, beating Chinese smartphone rivals. 

Apple was the top-selling mobile phone brand on Alibaba platforms on November 11, edging out Chinese brands Huawei and Xiaomi, which took the second and third spots respectively.

According to a list released by Alibaba on products that notched the highest gross merchandise value (GMV) on the e-commerce giant’s platforms during the Double 11 event, Apple was in the No. 1 place in the mobile phone category, CNBC reported.

Though Alibaba didn’t release specific figures on unit sales or the total GMV brought in by Apple, it suggested that the US tech giant had trumped Chinese phone brands on their home soil during the online sale last Sunday.

The news will come as big relief for Apple, which has faced some challenging times in the key market in the recent past as consumers flocked to cheaper Android smartphone offerings.  

What is worth noting in the sales surge during Double 11 is that it came after Chinese vendors brought down iPhone prices significantly in a bid to lure consumers.

The price-cutting strategy, which lowered the final tag on iPhones as much as 1,400 yuan per unit, seems to have encouraged Apple fans to upgrade their devices and also brought in new camp followers.

Lured by discounts of 10 percent or more, there was apparently a rush of online orders for gadgets such as iPhone XS Max, iPhone XS and iPhone X.

During Alibaba’s record-breaking 24-hour Singles Day shopping festival, Apple was one of the 237 brands that surpassed 100 million yuan (US$14.4 million) in sales during the event.

The US tech giant was also one among eight companies that achieved 1 billion yuan sales during the festival, reports said.

According to some mainland media outlets, two models of the iPhone, namely the iPhone XS Max and iPhone X, achieved more than a billion yuan sales each on Singles’ Day on Alibaba platforms.

If such figures are correct, Apple generated more than 2 billion yuan in sales from the shopping festival. And the figures do not include sales reaped from other e-commerce platforms.

Taking iPhone’s average selling price of around 6,000 yuan each, the two billion yuan sales could be equivalent to around 333,000 units of iPhones in just 24 hours.

According to reports, iPhone XS Max reaped sales that were ten-fold larger compared to iPhone XS.

Analysts believe Apple’s strong performance during Singles’ Day shows Chinese consumers are now more open to premium gadgets and looking beyond domestic brands such as Xiaomi and Huawei.

“Chinese smartphone users are maturing fast and they are looking to buy more high-end devices, which is a good sign not only for Apple but other brands,” Neil Shah, research director at Counterpoint Research, told CNBC.

“Since iPhone XS and iPhone XR were… so expensive, they were looking for the right deal to purchase,” the analyst added.

iPhone has been under pressure in China for a long time due to the strong market competition from local brands. Now, the Double 11 event offers proof that if Apple is willing to be flexible on the price front and allows discounts, it can boost sales significantly.

Some Chinese netizens have noted that they found several old and new models of iPhones were sold out during Double 11 events on some online shopping platforms — thanks to price reduction.

Xiaomi and Huawei were also on the top list during Double 11 in terms of sales, but they mostly relied on thousand-yuan products, while the cheapest model of iPhone still cost around 4,000 yuan each.

The premium gap between the Chinese brands and iPhone is still very large, yet people are now willing to scale up provided they are offered discounts.

In China, Apple will find the pricing strategy a bit tricky, given that it has positioned iPhone as a luxury product with significant premium against other smartphone brands. The firm’s recent pricing of iPhone X and iPhone XS models reflects an aim to maintain profitability despite slower shipment growth.

From the Double 11 sales data, Apple will get valuable insights on Chinese consumers and their spending habits, putting the company in a position to arrive at better marketing decisions.   

The US tech giant needs to think carefully about the product positioning and pricing to drive sales in the key market, while maintaining a certain level of profit margin.

Going forward, what is, however, truly important is that it must bring more innovations and breakthrough features to its devices, rather than offer incremental upgrades, to lure new users in a big way.

– Contact us at [email protected]

RC

EJ Insight writer

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