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Retail

Alibaba Tops Singles’ Day Record As Chinese Consumers Rally

By Steve Wynne-Jones
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Alibaba Tops Singles’ Day Record As Chinese Consumers Rally

Alibaba Group Holding Ltd. broke its Singles’ Day sales record with room to spare, offering assurances about the strength of the Chinese consumer despite the nation’s economic slowdown.

Sales on its e-commerce platform reached 102 billion yuan ($15 billion) shortly before 8 pm in China, easily topping last year’s total of 91.2 billion yuan with about four hours left to run. Dwarfing both America’s Cyber Monday and Black Friday, the 24-hour online promotion is closely watched for clues on the health of the economy and its largest online retailer.

Billionaire Jack Ma’s Alibaba pioneered the annual shopping spree in 2009 and has since transformed it into a social phenomenon, replicated by rivals including JD.com Inc. and now involving thousands of marquee labels across the world. The e-commerce giant turned up the star-wattage for 2016, enlisting actress Scarlett Johansson, sports celebrity David Beckham, basketball legend Kobe Bryant and pop-rock band One Republic to headline a pre-sale gala and drum up international attention. Pop star Katy Perry pulled out at the last minute because of a family emergency.

Executives had set the bar high, confidently predicting another record-breaking endeavour at a time when the economy is growing at its slowest pace in a quarter-century and a weakening yuan may curb enthusiasm for foreign wares.

China’s economy is increasingly dependent on its more than a billion consumers as global growth fizzles. Final consumption accounted for more than half of economic output last year. Shoppers have so far shrugged off a slowdown in the world’s second largest economy, with retail sales rising by 10.7% in September, a record for the year. The growing middle-class is now demanding better quality products, and innovative ways to shop.

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“Many foreign brands, with and without local China presence, will use this shopping event to further raise their brand profile with Chinese consumers,” said Andria Cheng, an analyst at eMarketer.

Singles’ Day was invented by college students in the 1990s as a counter to Valentine’s Day, according to the Communist Party-owned People’s Daily. Written numerically, November 11 is reminiscent of 'bare branches,' a local expression for bachelors and spinsters. It’s since morphed into a consumption phenomenon involving months of planning, millions of logistics and technology personnel, and a nationwide cascade of ads and promotions.

The best-selling items on Friday included Apple Inc. iPhones, Nike and Adidas gear and Haier appliances, the company said on its official blog.

Some 14,000 brands are hawking their products. Alibaba is touting a virtual reality service to let Chinese buy from Macy’s in New York and Tokyo’s Otaku Mode. It’s added live-streaming to its sites and even a location-based Pokemon Go-like mobile game to try and drum up interest.

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“Consumer behavior is changing,” Alibaba CEO Daniel Zhang said during the gala. “Shopping has become entertainment.”

Alibaba’s U.S.-traded shares fell as much as 4.6% Thursday. That followed a 3.2% slide on Wednesday amid concerns about how Donald Trump’s presidency could affect the company’s overseas expansion.

For the first six years, results were tabulated in Alibaba’s hometown of Hangzhou in eastern China. This year, it relocated its command center to the southern city of Shenzhen just across the border from Hong Kong, to try and capture international attention. Ma, who aims to get half the company’s revenue from beyond China by around 2025, has said that he wants to introduce the shopping festival to the U.S. and U.K.

Last year, a third of buyers made purchases abroad during the event -- Nike sneakers and Levi’s jeans were among the hotter items. Global retail e-commerce is expected to grow by 24% to $1.91 trillion in transactions this year, according to eMarketer. In China alone, that number will increase by 36% to $899 billion, it said.

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However, Alibaba’s event has drawn controversy around how it accounts for purchases, or gross merchandise volume. The U.S. Securities and Exchange Commission has been looking into data from last year’s promotion, responding in part to concerns that the total may include sales faked by third-party merchants or transactions that haven’t been paid for in the end. Vice chairman Joseph Tsai has said the company is cooperating with the regulator, sharing facts in an investigation it voluntarily disclosed.

Allegations of numbers-inflation have surfaced locally as well. On Tuesday, the State Administration for Industry and Commerce said it had summoned the largest online retailers -- including Alibaba, JD, Tencent Holdings Ltd. and Amazon.com Inc. -- to a meeting, warning them against inflating sales, touting fake goods or using predatory tactics on the day.

“There’s a lot of fuzziness into that number,” Paul Sweeney, an analyst with Bloomberg Intelligence, told Bloomberg Television. But “most investors look at the gross merchandise value that they report more for the directional tone that they set.”

Alibaba Group Holding Ltd. is also stepping up investments in the entertainment industry with the formation of a new media group along with a fund of more than 10 billion yuan ($1.48 billion) for new projects.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.
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