Bingo! China's Alibaba likely to conjure up another e-sales record on 'Double 11' singles day after hitting US$9.3 billion last year

PUBLISHED : Wednesday, 14 October, 2015, 7:29pm
UPDATED : Wednesday, 14 October, 2015, 10:19pm

Undaunted by China’s slowing economy, e-commerce powerhouse Alibaba Group is expected to set a new global-high for one-day online sales on “Double 11”, the world’s biggest online shopping festival held as part of the “Singles Day” event on the Chinese mainland.

That increase is forecast to be driven by mobile transactions, as well as Alibaba’s sharpened focus on international sales and the participation of more overseas merchants.

Alibaba posted total sales of US$9.3 billion, settled through its Alipay mobile and online payments platform, last November 11 as consumers from 217 countries and territories placed some 278 million orders for about a million different products during that 24-hour period.

The company on Tuesday kicked off the upcoming seventh anniversary of its Singles Day promotional festival, which will be hosted in Beijing next month.

“It is reasonable to expect Alibaba to reach another record gross merchandise volume for transactions [in Double 11] this year,” Alicia Yap, the head of China internet research at Barclays, said in a report on Wednesday.

“We believe mobile [transactions] will once again play an important role.”

Last year, analysts predicted “a global shopping frenzy” to raise Alibaba’s gross merchandise volume for Double 11 sales to rise by 40 per cent to more than US$8 billion.

New York-listed Alibaba, the world’s biggest e-commerce company, recorded a higher 58 per cent increase last year from US$5.8 billion in 2013.

Mobile transactions accounted for 42.6 per cent, or US$3.9 billion, of the gross merchandise volume notched by Alibaba last November 11.

Last’s year total also marked a 1,762 per cent improvement from the 2010 festival’s gross merchandise volume of US$142 million.

Yap did not provide any estimates for this year, but pointed out that hitting a new peak for Alibaba’s Double 11 sales would be helped by the festival’s expanded publicity targeting more consumers in China’s rural areas and a broader global audience, as well the participation of more international brands.

She also anticipated greater online-to-offline (O2O) sales support from Chinese electronics retailer Suning Commerce Group, in which Alibaba recently invested US$4.63 billion to take a roughly 20 per cent stake in the company, based in Nanjing in China’s eastern Jiangsu province.

Suning, which has more than 1,600 stores in about 600 mainland Chinese cities, has also become a partner of Cainiao, the logistics affiliate of Alibaba.

The combined logistics resources of Suning and Cainiao is expected to speed up deliveries outside of the major Chinese cities as these cover almost all of the 2,800 counties and districts in the country.

Jack Ma Yun, the lead founder and executive chairman of Alibaba, said on Tuesday that the company’s domestic expansion efforts were aimed to boost “consumption power” in China, which would help drive the economy forward.

“There are currently 300 million [members of the] middle class in China, and that number will rise to 500 million in 10 to 15 years,” Ma said.

Alibaba’s Double 11 promotion on Singles’ Day started in 2009, with just 27 merchants participating to help raise awareness for the value of online shopping.

Singles Day originated from Nanjing University, where students held the first “11/11” parties in the early 1990s. Young Chinese treat it as a day to celebrate being single and treating themselves to a special purchase.

Six years after Alibaba started its online shopping festival on the mainland, Double 11 has become a global event with tens of thousands in participating merchants and buyers in the millions.

Alibaba chief executive Daniel Zhang Yong said on Tuesday that 40,000 merchants from around the world, up from about 27,000 last year, will participate in the Double 11 festival this year.

Of the more than 30,000 brands signed up this year, about 5,000 are overseas-based brands from 25 countries.

Alibaba estimated that more than 6 million different products will be available for purchase on Double 11 through its various online shopping platforms, which include Taobao Marketplace, Tmall.com, group-buying site Juhuasuan and the AliExpress global retail site.

The company’s management, however, declined to make projections for Double 11 sales next month.

Barclays’ Yap said the focus for Alibaba was international growth.

“Alibaba hopes to have the ability to reach out to two billion consumers globally in the next 20 years,” she said.

Michael Evans, who was named president of Alibaba three months ago, said on Tuesday that the company wanted more international brands and retailers to sell their products to consumers in the world’s second-biggest economy.

He estimated that more than 350 million Chinese consumers are active shoppers on Alibaba’s online retail platforms.

“By 2020, China is expected to be the world’s largest e-commerce market for imported goods. That represents a huge opportunity for businesses of all sizes anywhere in the world,” Evans said.

Alibaba estimated to get more than 39 “country pavilions”, up from the current 12, set up on Alibaba’s online shopping platforms in time for next month’s Double 11 shopping festival.

These include online pavilions set up by the United States, Canada, Mexico, Britain, France, Germany, Italy, the Netherlands, Switzerland, Belgium, Spain, Australia, Colombia, Bahrain and Costa Rica.

Evans said Alibaba will open new offices in Italy, France and Germany in the coming months to cultivate those markets for online sales, while encouraging merchants there to set up shop in the company’s retail platforms to reach Chinese consumers.