Alibaba Tops Singles’ Day Sales Record Despite Slowing China Economy
China e-commerce giant beats last year’s $9.3 billion and exceeds analysts’ expectations
Singles’ Day, or ‘bare sticks’ day as it is known in China, is the largest online shopping day of the year globally. But what is it all about?
BEIJING— Alibaba Group Holding Ltd. reported a blockbuster $14.3 billion in sales during China’s Singles’ Day online shopping festival Wednesday, further highlighting the resilience of the Chinese consumer despite a flagging economy.
The results, posted by the Chinese e-commerce giant in the early morning hours on Thursday local time, were 54% higher than last year’s Singles’ Day and were better than many analysts had expected. They add to a string of positive notes from China’s consumer sector at a time when its overall economy is showing further signs of weakening. When denominated in the Chinese currency, the increase in total transaction value from last year’s sales event was 60%.
“This is a great day and it symbolizes the great power of China’s domestic consumption,” said Jack Ma, Alibaba’s executive chairman, addressing reporters ahead of the release of the final sales tally.
Earlier in the evening, Mr. Ma said he thought the coming months were likely to be challenging for China’s economy but that longer-term prospects were strong, particularly in consumption. “Of course, we believe the next five, 10 months, China’s economy might have big problems. It is a bumpy time,” but the economy will be better over the next 15 years, he said.
In October, China reported that the economy in the third quarter sputtered to its slowest pace since the global financial crisis. But companies ranging fromApple Inc. to Nike Inc.continue to report strong results from the fast-growing consumer market. On Wednesday, China reported that retail sales rose a better-than-expected 11% in October, higher than September’s 10.9% growth.
Alibaba said it took just half a day for sales generated on its Chinese and international marketplaces to exceed last year’s 24-hour total of $9.3 billion. Some analysts had expected that the total transactions recorded, measured by gross merchandise value—or GMV—would exceed $13 billion.
Still, Alibaba’s U.S.-traded shares were trading 2% lower late Wednesday afternoon. Analyst Henry Guo of Summit Research said investors may have been spooked by concerns about the broader economy.
Even amid a slowdown, a day of steep discounts might be the perfect spending trigger for any pent-up demand, said Daiwa Capital Markets analyst John Choi. “It’s a day of discounts, so people, regardless of the economic slowdown, will want to go out and look for bargains,” he said.
Singles’ Day—named for Nov. 11 and touted by Alibaba six years ago as a day for single people to splurge on themselves—has become the world’s largest e-commerce shopping day by value of transactions. Global brands have flocked to Alibaba and other e-commerce platforms. International brands participating in this year’s event included cosmetics giant Estée Lauder, Spanish clothing store Zara, British luxury-goods company Burberry and Japanese apparel chain Uniqlo. In Australia, a brand of baby formula blamed tight supplies on Singles’ Day demand from China.
A delivery driver loaded down with parcels, mostly from online shopping, in Beijing on China’s Singles’ Day. PHOTO: EUROPEAN PRESSPHOTO AGENCY
Besides bringing more global brands and retailers to China, Alibaba has been ramping up efforts to expand its global marketplace, AliExpress, which connects overseas consumers with Chinese manufacturers and wholesalers. But that growth has drawn scrutiny from business groups and brands concerned about counterfeits.
On Wednesday night, Alibaba’s chief executive, Daniel Zhang, told reporters that the company takes the issue of counterfeits seriously because it also hurts its business interests but that it wouldn’t affect Alibaba’s international expansion.
“We are very clear that we have the responsibility as a platform to fight against counterfeits,” Mr. Zhang said.
Many investors will now scrutinize the data to see where the Singles’ Day sales came from. Alibaba’s transaction volume got a boost from pre-Singles’ Day sales promotions that gave shoppers the ability to place deposits on some items ahead of the actual sales day. It also got a boost from the company’s $4.5 billion investment in Suning Commerce Group Ltd., an electronics retailer, aimed at giving the e-commerce company a new avenue for generating sales. An Alibaba spokesman said that in some Suning stores, electronic screens were installed to allow customers to make purchases through Suning’s Tmall store.
Alibaba has also grappled with what is known as brushing, a common technique in China in which online merchants fake sales on electronic platforms to appear popular and have better positions in search rankings. Last year an Alibaba executive told official media that 1.2 million sellers on its Taobao online bazaar faked 500 million transactions in 2013. Alibaba has said it ramps up efforts on Singles’ Day to eliminate brushing.
Alibaba’s main Chinese rival, e-commerce company JD.com Inc.,said it recorded about 32 million orders on Wednesday, compared with 14 million last year, with mobile orders accounting for nearly three-quarters of the volume. Unlike Alibaba, JD.com doesn’t release figures for the total value of merchandise sold on Singles’ Day.
Another closely watched metric is the proportion of transactions that are being made on mobile devices—a measure of how well the e-commerce companies are adapting to users’ shift to smartphones and tablets. Alibaba said mobile transactions made up 68% of its total sales, compared with 43% of transactions last year. Similarly, JD.com said more than 70% of orders were made on mobile devices.
The sale appears to be exerting an impact on the supply elsewhere of at least one popular item in China: baby formula.
Baby formula maker Bellamy’s Australia Ltd. apologized to its Australian customers for a shortage of its products. In messages to consumers on its official Facebook account, the company said demand for its products in China ahead of Singles’ Day had curbed stocks on Australian shelves.
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