Alibaba Singles’ Day: Shattered sales goals but slow growth

12 Nov 2018150 Views

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The Alibaba app logo. Image: jetcityimage2/Depositphotos

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How did Chinese giant Alibaba’s Singles’ Day sales bonanza measure up this year?

Singles’ Day started out in China as a celebration day for people who are not in relationships, but the meaning of it soon changed when e-commerce giant Alibaba saw its promotional potential. Since 2009, the company has held a massive Singles’ Day sale event on 11 November, in an effort to compete with rival events such as Black Friday and Cyber Monday.

Last year, Alibaba aimed to attract global shoppers in the face of flagging domestic interest in China, but trade tensions have made an impact this year. The company filed a record $30.8bn in orders yesterday during Singles’ Day, with sales rising 27pc compared to 2017. While it was still a solid result, compared with a healthier 39pc year-on-year increase in 2017, the drop in growth was significant.

Unsteady outlook for Chinese economy

The outlook for the Chinese economy is looking increasingly uncertain and ongoing trade tensions with the US are making their presence felt. Despite this, the company’s volume for Singles’ Day outpaced US Black Friday and Cyber Monday online sales combined, and beat out Amazon’s Prime Day.

Alibaba slightly lowered its full-year forecast, but said this was not a major cause for concern due to steady numbers from Chinese middle-class shoppers. Executive vice-chair of Alibaba, Joe Tsai, noted that middle-class consumers in China have experienced “significant real wage growth over the past decade, and they are looking for high-quality products to satisfy their discretionary spend and an increasingly sophisticated lifestyle”.

Tsai remained bullish in a company statement: “That trend (of a rising Chinese middle class) is not going to stop, trade war or no trade war.”

Many international brands such as Nike and Starbucks created exclusive products for Singles’ Day, highlighting the international hunt for the Chinese consumer.

Brick-and-mortar retail destinations

Alibaba Group CEO Daniel Zhang added that more brick-and-mortar ‘smart stores’ were crucial in terms of offline Singles’ Day profits for the company.

He said: “Today, around 200,000 smart stores joined November 11. As we always say, we truly believe the first thing for brick-and-mortar stores who want to go New Retail to do is to go digital … For all those retail partners, why they actively participated was not because it was a shopping day, but because it was a day to give people a unique experience.”

While Singles’ Day was a success, only 17.5pc of Chinese commerce is conducted online, so Alibaba intends to continue the digitisation drive across the country. The company and its competitors, such as JD, have been investing heavily in technology and logistics to boost mobile spending and court international consumers at the same time.

The Alibaba app logo. Image: jetcityimage2/Depositphotos

Ellen Tannam is a writer covering all manner of business and tech subjects

editorial@siliconrepublic.com