A Blog by Jonathan Low

 

Nov 10, 2017

Alibaba's' Online Shopping 'Singles Day' Top $1.5 Billion Sales In First Three Minutes, But...

$8.6 billion in the first hour.

The numbers are astounding, but the reality is that - as in the US and Europe - online sales growth is plateauing due to market saturation caused by a slowing in the number of new consumers buying smartphones for the first time (many, if not most of those who want them already own them).

This is causing re-investment in the physical retail market in China as it has elsewhere.  JL

Adam Jourdan reports in Reuters:

Alibaba alone saw $17.7 billion of goods sold on its platform at last year’s Singles’ Day.
The event loads up online shopping carts, while delivery men - and robots - are braced for an estimated 1.5 billion parcels expected. Spending rose by a third at 2016’s sale but 60% in 2015. “The lower hanging fruit has been picked and there’s increased competition for a share of consumer spending."Online retailers were being forced to push offline as well as overseas, and the online retail market was close to “saturation”
Chinese e-commerce giant Alibaba (BABA.N) said sales topped 10 billion yuan ($1.51 billion) in just over three minutes from the opening of Singles’ Day, an annual online discount sales gala that has become the world’s biggest shopping spree. Once a celebration for China’s lonely hearts, Singles’ Day has become a 24-hour extravaganza that outsells Black Friday and Cyber Monday U.S. sales combined, and acts as a barometer for China’s consumers.
After a star-studded event in Shanghai late on Friday counted down to the sale’s midnight start, Alibaba said gross merchandise volume (GMV) topped 10 billion yuan in a little over three minutes, and had almost doubled, to 19.1 billion yuan, in under six minutes - beating the entire day’s sales in 2012.
Alibaba alone saw $17.7 billion of goods sold on its platform at last year’s Singles’ Day.
The event gets shoppers around China scouting for bargains and loading up their online shopping carts, while delivery men - and robots - are braced for an estimated 1.5 billion parcels expected over the next six days.
“This is a big event for China, for the Chinese economy,” co-founder and Alibaba vice chairman Joseph Tsai said ahead of the sales bonanza. “On Singles’ Day, shopping is a sport, it’s entertainment.”
Tsai said rising disposable incomes of China’s “over 300 million middle-class consumers” was helping drive the firm’s online sales - and would continue. “This powerful group is propelling the consumption of China,” he said.
Analysts and investors will closely watch the headline sales number, which is likely to top last year’s total. Spending rose by nearly a third at 2016’s sale - the eighth iteration of the event - but that was slower than the 60 percent increase logged in 2015.
At Alibaba’s Friday night gala, co-founder and chairman Jack Ma hosted guests including actress Nicole Kidman, singer Pharrell Williams and Chinese musicians and film stars such as Zhang Ziyi and Fan Bingbing.
The excitement around the shopping blitz, however, masks the challenges facing China’s online retailers such as Alibaba and JD.com Inc (JD.O), which are having to spend more to compete for shoppers in a broader economy where growth is slowing.
“A lot of the lower hanging fruit has been picked and there’s increased competition for a share of consumer spending,” said Matthew Crabbe, Asia Pacific research director at Mintel.
He estimated Alibaba’s Singles’ Day sales growth would likely slow to around 20 percent. Online retailers were being forced to push offline as well as overseas to attract new shoppers, and the overall online retail market was close to “saturation”.
“They’re having to spill over out of the purely online realm into the wider consumer market,” Crabbe said.
This has sparked deals to buy bricks-and-mortar stores in China, and overseas tie-ups especially in Southeast Asia. Technology, too, has been key, with virtual reality dressing rooms and live fashion shows to attract shoppers to haute couture.
Ben Cavender, Shanghai-based principal at China Market Research Group, noted that brands were being more careful with the deals they have on offer this year to avoid “margins getting killed”, and were often asking for deposits in advance.
In previous years, most prices were often halved.
“I think prices seem high and I‘m totally lost as to the rules(about discounts),” said Gao Wantong, 21, a student in Beijing, though he said he still planned to stay up late to grab early sales.

Fu Wenyue, a 23-year-old dresser in Shanghai, said she had already spent around 4,000 yuan ($600) on clothes, cosmetics and kitchen utensils in pre-event sales, transactions ahead of the day which officially only go through once midnight strikes.

“I’ve bought some stuff already, but I haven’t finished shopping yet,” she said.

($1 = 6.6386 Chinese yuan renminbi)

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