The 2018 iteration of Singles’ Day, the shopping and entertainment extravaganza from Chinese e-commerce giant Alibaba BABA -2.78%, has ended, with the company notching another record sales day. But with this Singles’ Day—10 years after Alibaba first made 11/11 a shopping event to celebrate those still on their own—there is much more to analyze than that.
With Alibaba having expanded the scale of Singles’ Day activities and involved more brick-and-mortar stores and food and hotel services, the gross merchandise value, or GMV, across its platforms closed the day 27% higher, for a record $30.8 billion (RMB 213.5 billion). The company’s Singles’ Day volume again outpaced U.S. online sales on Black Friday and Cyber Monday combined and topped Amazon’s Prime Day shopping bonanza, which should probably come as no surprise given that Alibaba’s number of mobile monthly active users is 666 million—double the entire U.S. population.
The day has surfaced as a barometer of Chinese consumers’ spending, especially against the backdrop of a slowing China economy and a U.S.-China trade war.
“That trend (of a rising Chinese middle class) is not going to stop, trade war or no trade war,” Alibaba executive vice chairman Joe Tsai said in a company blog post Sunday.
While the latest Chinese government data showed “weakness” in large-ticket items including home appliances and autos and suggested Chinese consumers see “uncertainty in the future and are cutting back on durable goods purchases,” Alibaba’s China retail marketplaces, including Tmall and Taobao, have continued to see “robust growth” in consumer staples, cosmetics and apparel, Tsai said earlier this month when Alibaba reported its latest quarterly earnings.
China’s “middle-class consumers 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 said at the time. Citing an OECD forecast, Tsai said China’s middle class would almost triple by 2030, to 850 million, from 300 million.
Here are other takeaways from this year’s Singles’ Day:
International brands want their share of the Chinese middle class’ wallet
When Alibaba first began to monetize Singles’ Day in 2009, 27 brands, including Adidas , signed on to participate. The total number from both local and overseas brands this year: 180,000.
Over 40% of Alibaba’s Singles’ Day shoppers bought from international brands, and almost 240 brands—including Apple, Dyson, Kindle, Estée Lauder, L’Oréal, Nestle, Gap, Nike and Adidas—each topped RMB 100 million ($14.4 million) in one-day GMV, Alibaba said.
Despite the U.S.-China trade spat, Chinese consumers’ love for American products showed no signs of abating: The U.S. trailed only Japan in selling to China, in terms of GMV.
For instance, Starbucks SBUX -0.17% and Nike NKE -1.83%, both of which have touted the importance of the China market for their growth, designed Singles’ Day-exclusive drinks, sneakers and other merchandise. Nike, in preppingfor what it described as a “colossal” Singles’ Day, said it would even employ drones for fast delivery to rural customers.
Alibaba faces growing Singles’ Day competition
Just as Amazon’s Prime Day has got U.S. retailers including Walmart WMT +0.65% and Target TGT -0.75% pushing their own promotions, transforming a summer lull into a big shopping occasion on the retail calendar, Alibaba’s rivals—including its top competitor, JD.com JD -3.08%—have been aggressively upping their Singles’ Day game. For instance, JD.com—whose impressive list of investors and partners includes Walmart, Google and Tencent, the parent of China’s top mobile messaging app, WeChat—said its Singles’ Day transaction volume totaled RMB 160 billion, or $23 billion.
Many brands are not blind to the importance of other platforms, either. Nike, for instance, said its one-time Singles’ Day deals would be available across all of its Nike Direct platforms, including Nike.com, the SNKRS App and Nike.com on Alibaba’s Tmall, as well as the Nike WeChat Mini-Programs on Tencent platform. For good reason: WeChat’s number of global monthly active users this year has topped a billion.
According to research firm Analysys International, Alibaba had a 58% share of China’s business-to-consumer e-commerce market share by GMV as of the second quarter, followed by JD.com at 26%.
A record sales day, yes, but is it sustainable, and at what cost?
Alibaba’s Singles’ Day, despite reaching another record, actually saw its growth rate slow from about 40% last year, just as Amazon’s record Prime Day sales this year didn’t manage to keep it from reporting slowing quarterly e-commerce sales growth.
Alibaba, like its global rivals, is aggressively eyeing overseas growth. For instance, its acquisition Lazada, a Southeast Asia e-commerce marketplace, held its own Singles’ Day shopping event for the first time this year.
Still, even with all the effort to win market share, it’s unclear if the day itself was actually profitable for Alibaba and its rivals. Alibaba and its major competitors have been doubling down on technology and logistics spending that could make it easier for China’s mobile-phone-toting consumers to toggle seamlessly between shopping on their smartphones and in-store, but those investments have come at a cost.
A case in point: Despite reporting higher revenue across its core e-commerce, cloud computing and other segments, Alibaba’s income from operations actually slumped 19% in the most recently reported quarter, hurt in part by spending on what Alibaba has called “New Retail” initiatives to integrate online and physical store sales.
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