Alibaba's Singles' Day: an increasingly global shopping event

It is time for global retailers to embrace the all-powerful Singles’ Day after this year’s multi-billion-dollar sales performance proved once again it is the world’s premier shopping event.

That is the view of data and analytics company GlobalData, which says the annual 11 November shopping event created by Chinese retail behemoth Alibaba Group now largely surpasses its major Western equivalents such as the US-focused-born Black Friday at the end of November.

Alibaba reported a record RMB213.5 billion (US$30.8 billion) of gross merchandise volume (GMV) for the 24-hour period, which was an increase of 27% on the same promotional day last year. Despite the annual growth slowing from last year’s 39%, it still put other single-day promotion events in the shade.

For example, Alibaba said it generated $1 billion in sales just 85 seconds into the day, while in the first hour alone it had brought in close to $10 billion, which is almost double the revenue of the the whole of Black Friday in 2017.

Aleksandrina Yotova, associate consumer analyst at GlobalData, says: “Even if not participating directly in the event, retailers could introduce Singles’ Day discounts to boost revenue and increase popularity.”

Some 237 brands exceeding RMB100 million in GMV during this year’s Singles’ Day, including companies such as Apple, Dyson, and Estée Lauder. But small-to-medium-sized enterprises are also widely featured in the sales event, which tends to see beauty, fashion, and technology items sell better than products in other categories.

Yotova continues: “The rise of female Chinese consumers has boosted premium beauty sales; for example, with US luxury brand Estée Lauder, ranking fourth in terms of sales last year.”

Stats tell the story

Alibaba says that US$10 billion of total GMV was settled through its Alipay payments platform one hour and 48 seconds into 11 November, and with this being almost a third of total sales during the day it shows how the event has an influence on delaying consumer spending until the day itself.

There was participation from more than 180,000 brands, up by just over 40,000 companies on last year. The 11.11 shopping festival, as it is officially known and marketed as by Alibaba, began in 2009 with participation from just 27 merchants. Comparing these figures to today highlights how quickly it has been able to scale.

It was originally devised to raise awareness of online shopping among merchants and consumers, and data from the last few years suggests both parties clearly now see the value of eCommerce.

In what could be described as US Superbowl-esque hyperbole, the hours leading up to 11 November saw Alibaba’s video streaming platform, Youku, host the fourth annual countdown gala to celebrate the official launch of Singles’ Day. For those who did not want to watch online, the build-up was also broadcast across China on two major Chinese TV stations.

There were international celebrity appearances and performances from the likes of model Miranda Kerr, singer Mariah Carey and global entertainment group Cirque du Soleil, reinforcing the scale of the proceedings.

Alibaba Group CEO Daniel Zhang, who will take on the role of chairman when founder Jack Ma vacates from the role in one year’s time, explains that despite Singles’ Day starting as online event, brick and mortar merchants are now involved more than ever.

He suggests newly upgraded and digitised “smart stores” played their part in driving sales across the country, with some of Alibaba’s recent investments, such as hypermarket operator, RT-Mart, and home furnishings company, Easyhome, making a contribution.

Finding reasons for the continued growth in sales and popularity of the shopping event, Alibaba executive vice chairman Joe Tsai says: “I think you have to understand Alibaba and what Alibaba’s doing in the context of the long-term secular trend that’s developing in China, which is the rise of the Chinese middle class.”

Global opportunity

More than 40% of consumers involved in Singles' Day purchased goods from overseas brands, with Japan, the US, South Korea, Australia and Germany leading the way in terms of countries selling to China.

Yotova says that higher import tariffs resulting from US-China trade tensions are likely to result in higher prices of US products in the Asian nation, but she adds there will still be significant demand for foreign goods from Chinese shoppers if they are quality.

Referencing the rise in the Chinese middle classes, Tsai comments: “That trend is not going to stop, trade war or no trade war.”

GlobalData says Russians have been the most interested foreign Singles’ Day shoppers in previous years, as consumers there have taken advantage of Alibaba’s cross-border e-commerce platform, AliExpress. The website had 22 million active buyers in Russia in 2017, according to Alibaba.

Alibaba-owned online marketplace Lazada participated in this year’s event too, helping spread the shopping day to consumers in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam. For the event to continue growing each year on such a major scale, involvement from even more countries will be needed

“Alibaba’s strategy involves making Singles’ Day global, and offering free shipping helps lure overseas shoppers to make more impulse purchases,” Yotova notes.

Attention now turns to Black Friday on 23 November, which itself has become an international affair. It has some distance to travel to usurp sales levels in China on 11 November.