Alibaba Singles’ Day Draws Record Sales Amid Economic Concerns.
Alibaba Group Holding Ltd’s total value of goods transacted during its Singles’ Day shopping festival was 91.2bil yuan (RM62.4bil), the Chinese e-commerce giant said in Beijing.
“The successful implementation of multiple strategies adopted by Alibaba seems to have driven Singles Day 2015 beyond the 40% growth expectation,” raved Deutsche Bank‘s Alan Hellawell III, who raised his price target by 10% to $98.Jack Ma, executive chair of the Alibaba Group speaks in front of a giant screen showing real-time sales figures of e-commerce giant Alibaba, during a press conference for the ‘Singles’ Day’ online shopping festival held at National Aquatic Center, also known as the “Water Cube” in Beijing, China, Wednesday, Nov. 11, 2015. The event, which generated a 60 percent sales increase from a year earlier, was part of Chairman Jack Ma’s strategy to transform Alibaba’s online marketplaces into platforms for international trade.
Shoppers spend more than $9 billion within 24 hours during the country’s biggest online shopping holiday, smashing last year’s figure to set a record for a single day of sales. Singles’ Day, occurring every year on the 11th day of the 11th month, is a Chinese celebration for the “lonely” that has been around for just over a decade. Chinese consumers bought 69% of the total sales on mobile, a sharp rise from 42.6% a year ago. “Generally speaking Tmall mobile penetration is higher than Taobao, another fact likely also driving mobile take rate upside.” The B2C Tmall has better monetization rate than the C2C Taobao and can translate more gross merchandise volume (GMV) into revenue for Alibaba. Other analysts paid much attention to the mobile contribution as well. “We note that JD (JD) doesn’t lead Alibaba by a large margin in mobile penetration despite the help from Tencent‘s WeChat and QQ – JD disclosed that about 70% of orders on its platforms were through mobile this year on November 11th.
The cumulative national bill for the day-long commercial orgy dwarfed Americans’ online spending over the five-day frenzy from Thanksgiving to Cyber Monday last year. Considering the strong mobile monetization improvement trend over the last couple of quarters, we believe the increasing mobile penetration should help drive the top-line growth for Alibaba going forward,” wrote Summit Research‘s Henry Guo. The success of Singles’ Day demonstrated how e-commerce companies can manufacture consumer demand through promotion, a strategy Amazon.com Inc. used in July with its first “Prime Day.” It also highlighted how U.S. companies can pursue growth in China, said Keith Anderson, vice president of strategy and insights at the Boston research firm Profitero. “Alibaba is a pathway for growth for American and European brands,” Anderson said. But with sales hitting new highs year after year, it has become a massive — and highly lucrative — business opportunity embraced by the nation’s digital retailers. But Alibaba in 2009 co-opted the event into a consumption-fest for all, featuring steep discounts and other promotions aimed at attracting droves of customers online.
Competition for a slice of China’s 668 million Internet users is turning increasingly fierce, and Alibaba kicked off this year’s mammoth event with a television spectacular at Beijing’s Water Cube Olympic swimming venue. The company’s shares failed to get a boost in the U.S. as some investors stayed focused on the health of the Chinese economy and the strength of the country’s consumers, who remain Alibaba’s lifeblood. James Bond actor Daniel Craig and Hollywood star Kevin Spacey — in his role as President Frank Underwood from the Netflix series “House of Cards” — were just two of the galaxy of foreign and domestic stars involved.
Retail sales climbed 11 percent, the quickest gain this year and beating the median projection of economists, as the nation’s leaders seek to re-balance the economy toward consumption and services. Alibaba has stressed its focus on international e-commerce this Singles’ Day. “Within the next five years, we expect China will become the world’s largest e-commerce market for imported products,” President Michael Evans told reporters. “If you’re a new brand to the market, you don’t want to train your consumer to wait for a sale but you also need to use this holiday to break in with a top spending consumer,” Buchwald said. The figures were “very solid evidence for the power of Chinese consumers”, chief executive officer Daniel Zhang was quoted as saying, adding that when the company started the event “we never dreamed it could be such a huge shopping day”.
Taking Singles’ Day festivities to China’s political, economic and media hub came after Alibaba’s roller-coaster first year as a public company. Speaking at the company’s Singles’ Day celebration in Beijing, Jack Ma, the company’s eccentric founder and executive chairman, told reporters the event’s annual growth in the future should be over 50%.
In comparison, desktop sales for the five days from Thanksgiving through Cyber Monday in the United States last year stood at $6.56 billion, according to Internet analytics firm comScore. Alibaba estimated that 1.7 million deliverymen, 400,000 vehicles and 200 airplanes would be deployed to handle Singles’ Day packages holding everything from iPhones to underwear. Alibaba said its logistical arm and its partners would use more than 1.7 million personnel, 400,000 vehicles, 5,000 warehouses and 200 planes to handle deliveries. The company is opening its third U.S. office in New York to go along with those in Washington, D.C., and San Francisco, he said. “This year’s event is more global with international players joining in,” said Fangting Sun, a senior research analyst with Euromonitor. “Alibaba aims to both attract more international players selling products to China and the domestic players to expand to the overseas markets.” This report includes information from Bloomberg reporters Edwin Chan in Hong Kong, Kevin Hamlin in Beijing and Candy Cheng in San Francisco, as well as reporting from The New York Times. Australian company Bellamy’s had to apologize to customers Down Under after supermarket shelves there were stripped bare of milk powder, a shortage, the company said on Facebook, that was due to Chinese demand.
Singles Day has received vocal support from the government at a time when China’s economic expansion is slowing and Beijing is trying to transform its growth model into a more sustainable one driven by consumption. Chinese Premier Li Keqiang’s office phoned Alibaba chairman Jack Ma hours ahead of the promotion, “congratulating and encouraging the creation and achievement of the 11.11 event”, said a post on a social media account of Tmall, the group’s business-to-consumer arm. The mega-spending spree came as the government announced industrial output growth had fallen to 5.6 percent in October, a six-month low, highlighting the need for the transition to consumer spending.
But Chinese Internet users were more interested in their new acquisitions than government policy — although many lamented that they had spent far too much money. “I can only afford to eat dirt for the next half year,” said a user on Sina Weibo, with an attached screengrab of a Taobao app showing she had bought 42 items.