November 12, 2016 5:00 am JST

Alibaba breaks Single's Day record with $17.8bn sales

MARIKO TAI, Nikkei staff writer

Alibaba's gross merchandise volume for Single's Day reached 120 billion yuan in 24 hours.

SHENZHEN -- China's biggest shopping day brought another sales record for Alibaba Group Holding, with the Nov. 11 Single's Day bringing in $17.8 billion-worth of goods and services, boosted by Chinese enthusiasm for overseas brands.

"I've been waiting for this day to happen!" said Lin Lin, a 26-year-old plastic surgeon living in central Beijing. She splashed about 30,000 yuan ($4,400) on clothes and shoes on Alibaba's shopping platform Taobao on Friday.

"It's crazy, some products I wanted were out of stock in a second," she said of the shopping fever that grips the nation on the day also known as Double 11, due to the date on which it happens.

Likeminded shoppers flocked onto Alibaba's shopping platforms, pushing gross merchandise volumes to surpass 10 billion yuan within the tiny window of six minutes, 58 seconds after the event kicked off at midnight on Thursday.

At the event's close 24 hours later, the e-commerce group had generated 120.7 billion yuan GMV in total -- more than the combined total raised on last year's Black Friday and Cyber Monday, the biggest shopping days in the U.S., which take place around the Thanksgiving holiday.

Beyond singledom

The concept of Single's Day originally began in the 1990s as a way for single college students to celebrate their single status. It did not become a big online shopping day until Alibaba got involved in 2009. Just seven years ago, only 27 merchants participated, but this year, the figure has grown to 100,000 merchants, all competing to offer discounted products.

The shopping frenzy in the world's second largest economy continued to expand this year. Fifteen hours and 19 minutes into the event, a big screen in front of hundreds of journalists noted that sales had surpassed 91.2 billion yuan -- last year's record.

The countdown beforehand saw international celebrities including sports stars David Beckham and Kobe Bryant at the launch event in Shenzhen. Alibaba founder Jack Ma Yun also appeared and performed magic tricks, later joined by American actress Scarlett Johansson.

Alibaba's series of heavy discounts first began weeks ago, with a dazzling eight-hour-long fashion show in Shanghai on Oct. 23. The company deployed 200 top models, all clad in globally well-known brands including Burberry, UGG, New Balance and Guerlain. Customers present at the show and those watching on Alibaba's shopping platform could pre-order the items they saw on the catwalk.

Overseas bias

Among the 100,000 merchants taking part in Single's Day, just over 10% were from outside China. However, the most products were bought from Japan, followed by the U.S., South Korea, Australia and Germany. During the day, 37% of consumers bought international brands, which accounted for 27% of GMV. The Nike shop on Alibaba's online marketplace Tmall saw the biggest sales among international brands, followed by Uniqlo, Adidas and New Balance.

Apart from luxury brands, daily necessities like diapers, powdered baby milk and moisturizing masks continued to be top-selling products.

"What I'm seeing is Chinese consumers are demanding more foreign products today," Chris Tung, Alibaba's chief marketing officer, told the Nikkei Asian Review on Friday.

He said that he also sees growing demand across China both from big cities and rural areas. For the savvy consumers in cities, he said, their purchases are based around personalization, diversity and choice, while rural consumers focus on trust and quality.

To satisfy these 'savvy consumers', Alibaba has brought new technologies into its shopping experience. This year, the media group invited 150,000 customers in China to join its virtual reality shopping experience for the first time. Chinese consumers were able to go to virtual stores, including Macy's and Costco in the U.S., Matsumoto Kiyoshi and Tokyo Otaku Mode in Japan, and Chemist Warehouse and Freedom Foods in Australia.

But Alibaba is not just looking at one-directional transactions, with Chinese consumers buying goods from overseas markets. "We hope more consumers from more countries could join our Double 11, make Double 11 a real feast for worldwide consumers," said Daniel Zhang Yong, director and chief executive officer at Alibaba Group.

"We don't regard ourselves as an ordinary company, we regard ourselves as an economy," Ma told reporters at the media center just before the event closed. "We are lucky to be taking a role in building this new economy."

Economic distortion

China is in the middle of a transition from a manufacturing-focused economy to a consumption-driven one, with the service sector now generating more than half of China's gross domestic product, and Alibaba is inarguably driving this shift.

However, because the shopping day has grown in importance across the nation, it is also distorting the market somewhat.

"We don't buy products for weeks before the Double 11 day. What we do is put the products we want into a shopping cart [online], and purchase them when the event kicks off," said Liu Brenda, a financial consultant working in Beijing. "We also buy several months' supply of products." She said that she and her friends wait to buy daily necessities like tissue papers and cat food.

As the shopping day is changing consumer behavior, consumption growth becomes seasonally volatile. The change in consumer behavior has been felt by retailers already.

"Regular prices do not appeal to Chinese consumers anymore," said one executive of a Japanese retailer, referring to the fact that consumers would rather be patient and wait for discounts, and meaning sales are disproportionately loaded up in November.

Nikkei staff writer Wataru Kodaka contributed to this story.

Asia300

Alibaba Group Holding Ltd.

China

Market(Ticker): NYS(BABA)
Sector:
Industry:
Retail Trade
Internet Retail
Market cap(USD): 261,972.67M
Shares: 2,430.17M

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