Author(s): Raghu Gopal
Sunday 11 November was Singles' Day in China, an informal holiday that began as an occasion for young single people to meet. Despite its origins, the holiday has become better known as the world's largest shopping day when Chinese retailers, particularly online sellers, run major sales to move massive volumes. Alibaba has rebranded its own sales event, now calling it the 11.11 Global Shopping Festival.
This year's edition of the shopping festival broke a sales record, as it has done during each of the previous events. Alibaba alone sold almost $31 billion worth of goods during the 24-hour period this past Sunday, rising from about $25 billion in 2017 (see The Amazing Ones). In 2009, the first year of the festival, gross merchandise value totalled $7.5 million. This year, it took just 85 seconds for sales to hit $1 billion.
By comparison, in 2017 total online sales in the US on Thanksgiving Day, Black Friday and Cyber Monday reached $14.5 billion.
Since 2015, Alibaba has combined online shopping discounts with live entertainment, hosting extravagant annual galas to launch the day's festivities. These televised events draw in an audience of about 200 million viewers who tune in to catch product launches, win prizes and witness celebrity appearances. Alibaba kicked off this year's sales spectacle with a gala that featured US singer Mariah Carey, a Japanese Beyonce impersonator and a performance by Cirque du Soleil with a shoe-shopping theme. It also featured a "see now, buy now" fashion show broadcast live on 10 different video platforms.
According to Alibaba, more than 180,000 brands from 75 countries and regions participated in the shopping spree. The Chinese giant sought to expand its shopping festival by linking its massive online reach with an offline retail presence. It also looked to push the sale into other markets, for example, by selling through Lazada, an e-commerce marketplace operating in South-East Asia in which Alibaba owns a majority stake. Alibaba's logistics subsidiary in China, Cainiao, handled just over 1 billion orders, up from 812 million in 2017.
The 11.11 Global Shopping Festival has become an important bellwether event, not just for Alibaba, but also for the Chinese economy. This year's gala gave a glimpse of consumer sentiment in China as US tensions and a potential tariff war threaten to dampen the world economy.
With a rise in revenue of 27 percent year-on-year, the one-day sale generated gross merchandise value equivalent to the annual GDP of Latvia. It's difficult to see any negative trends, but this was a smaller lift than the 39 percent year-on-year growth recorded in 2017, a sign that the law of large numbers is kicking in. Furthermore, Alibaba has just reported its 10th successive quarter of revenue growth above 50 percent per year, causing some analysts to worry that the festival is starting to lose its steam (see Instant Insight: Alibaba Results, Fiscal 2Q19).
As economic growth starts to slow in its home country, Alibaba is already looking to international markets to continue the record-breaking expansion. Promotions in this year's festival targeted Chinese consumers in Asia, the US and Australia. The top countries selling to China during the festival were Japan, the US, South Korea, Australia, Germany and the UK, and over 40 percent of consumers bought from international brands.