Singles’ Day trumps Black Friday and Cyber Monday combined
In this article (5)
Alibaba, the Chinese e-commerce giant, said on 11 November 2017 its Singles’ Day sales extravaganza hit $25.4 billion, smashing its own record from last year and cementing it as the world’s biggest shopping event.
Once a celebration for China’s lonely hearts, Singles’ Day has become an annual 24-hour buying frenzy that exceeds the combined sales for Black Friday and Cyber Monday in the United States, and acts as a barometer for China’s consumers.
As tills shut midnight on Saturday, Alibaba’s live sales ticker registered 168.3 billion yuan, up 39 percent from 120.7 billion yuan in 2016. The dollar figure was up more steeply due to the strength of the yuan against the greenback in 2017.
The event began soon after a star-studded event in Shanghai late on 10 November 2017. As midnight hit, a deluge of pre-orders helped drive a billion dollars of sales on Alibaba’s platforms in the first two minutes and $10 billion in just over an hour.
“In terms of scale it just dwarfs any other event out there,” said
Ben Cavender, Shanghai-based principal at China Market Research Group.
At just past the halfway mark, the headline gross merchandise volume swept past last year’s dollar total just shy of $18 billion. Shortly afterward, sales surpassed the 2016 total in the local currency.
The event gets shoppers around China scouting for bargains and loading up their online shopping carts, while delivery men – and robots – brace for an estimated 1.5 billion parcels expected over the next six days.
“This is a big event for China, for the Chinese economy,” Joseph Tsai, Alibaba’s co-founder and vice chairman, said. “On Singles Day, shopping is a sport, it’s entertainment.”
Tsai said rising disposable incomes of China’s “over 300 million middle-class consumers” was helping drive the company’s online sales — and would continue. “This powerful group is propelling the consumption of China,” he said.
The final total — more than the GDP of Iceland or Cameroon — leaves other shopping days in the shade. Cyber Monday in the United States saw $3.45 billion in online sales last year.
Investors closely watch the headline number, though some analysts say the way it is calculated is too opaque. The U.S. Securities and Exchange Commission launched a probe into Alibaba‘s accounting practices in 2016, including into its Singles’ Day data. That investigation is as yet unresolved.
“In terms of scale it just dwarfs any other event out there,”
Last year, the sales number rose by nearly a third at the eighth iteration of the event – though that was slower than the 60 percent increase logged in 2015.
Slower growth?
At Alibaba’s Friday night gala on 10 November 2017, the company’s co-founder and chairman, Jack Ma, hosted guests including the actress Nicole Kidman, singer Pharrell Williams and Chinese musicians and film stars such as Zhang Ziyi and Fan Bingbing.
The excitement around the shopping blitz, however, masks the challenges facing China’s online retailers such as Alibaba and JD.com Inc., which are having to spend more to compete for shoppers in a broader economy where growth is slowing.
“A lot of the lower hanging fruit has been picked and there’s increased competition for a share of consumer spending,” said Matthew Crabbe, Asia Pacific research director at Mintel. The sale did though beat his forecast of 20 percent growth.
Online retailers were being forced to push offline as well as overseas to attract new shoppers, and the overall online retail market was close to “saturation,” raising questions about whether current rapid growth could be sustained.
“They’re having to spill over out of the purely online realm into the wider consumer market,” Crabbe said.
This has sparked deals to buy bricks-and-mortar stores in China, and overseas tie-ups, especially in Southeast Asia. Technology, too, has been key, with virtual reality dressing rooms and live fashion shows to attract shoppers.
Alibaba also said it had turned 100,000 physical shops around China into “smart stores” for this year’s event. Goods perused by people at the stores, but then bought and paid for on Alibaba’s platforms, were added towards the sales total.
China Market Research Group’s Cavender said brands were also increasingly making smaller price cuts to avoid “margins getting killed,” and were often asking for deposits in advance. In previous years, prices were often halved.
Fu Wenyue, a 23-year-old dresser in Shanghai, said offers this year were smaller but more “personalized” as brands used big data to hone their targets. Fu spent 4,000 yuan on clothes, cosmetics and kitchen utensils in pre-event sales, and kept shopping on the day.
“In actual fact, I think I spent even more than I did last year,” she said.
Questions & Answers
Q.Why did the dollar sales figure increase more sharply than the yuan figure for Singles' Day?
Why did the dollar sales figure increase more sharply than the yuan figure for Singles' Day?
The dollar figure for Alibaba's Singles' Day sales rose more steeply compared to the yuan total due to the yuan's strength against the US dollar in 2017. The final reported sales total was $25.4 billion.
Q.What challenges are China's online retailers facing despite the success of Singles' Day?
What challenges are China's online retailers facing despite the success of Singles' Day?
Online retailers like Alibaba are finding it harder to attract shoppers as growth slows in the broader economy and competition for consumer spending increases. They are having to spend more and expand into offline retail and overseas markets to maintain growth.
Q.How did Alibaba incorporate physical stores into the Singles' Day sales event this year?
How did Alibaba incorporate physical stores into the Singles' Day sales event this year?
Alibaba transformed 100,000 physical stores into 'smart stores' for this year's event. Goods viewed in these stores but purchased on Alibaba's platforms were included in the overall Singles' Day sales total.
Q.Why do some analysts question the headline sales figure for Singles' Day?
Why do some analysts question the headline sales figure for Singles' Day?
Some analysts believe the method for calculating the Singles' Day sales figure is too opaque, leading to questions about its accuracy. The US Securities and Exchange Commission also launched an unresolved probe into Alibaba’s accounting practices, including this data.
Reader pulse
What is Alibaba’s biggest challenge for Singles’ Day growth?
16,638 votes so far