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November 13, 2017

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Singles Day nets Alibaba US$25.4b

Source: Agencies | 00:01 UTC+8 November 13, 2017 | Print Edition

E-COMMERCE giant Alibaba said its Singles Day sales extravaganza hit US$25.4 billion on Saturday, smashing last year’s record 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.

As tills shut at midnight on Saturday, Alibaba’s live sales ticker registered 168.3 billion yuan (US$25.4 billion), up 39 percent from 120.7 billion yuan a year earlier. The dollar figure was up more steeply due to the strength of the yuan against the US currency.

At the peak, 256,000 payments were being processed per second on Saturday, the firm said, more than 90 percent of them placed via mobile devices.

Alibaba’s rival JD.com, whose shopping season kicked off on November 1, reported 127.1 billion yuan of accumulative sales over the 11-day period.

Singles Day began soon after a star-studded event in Shanghai late on Friday. 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 US$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 US$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 staff — 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,” said Joseph Tsai, Alibaba’s co-founder and vice chairman. “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 US saw US$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 US Securities and Exchange Commission launched an investigation into Alibaba’s accounting practices in 2016, including its Singles Day data. That investigation is as yet unresolved.

Last year, the sales number rose by nearly a third at the eighth version of the event — though that was slower than the 60 percent increase logged in 2015.

At Alibaba’s Friday night gala, the company’s co-founder and Chairman Jack Ma hosted guests including actress Nicole Kidman, singer Pharrell Williams and Chinese musicians and film stars including 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, 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.

Online retailers are being forced to push offline sales as well as go overseas to attract new shoppers, and the overall online retail market was close to “saturation,” raising questions about whether the current rapid growth can 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 brick-and-mortar stores in China, and overseas tie-ups especially in Southeast Asia.

Alibaba turned 100,000 physical shops around China into “smart stores” for this year’s event. Goods perused by people at the stores, but bought and paid for on Alibaba’s platforms, were added to the sales total.

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.

“I think I spent even more than I did last year,” she said.

Environmentalists, meanwhile, accuse Alibaba and other e-commerce companies of fueling a culture of excessive consumption and mountains of waste.

Greenpeace said Singles Day deliveries last year created 130,000 tons of packaging waste — less than 10 percent of which was recycled.

It said e-commerce is more carbon-intensive than brick-and-mortar shopping, calling Singles Day a “disaster for the environment.”

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