Alibaba

Online vs Offline Commerce

That’s the sound of the cash register as Alibaba braces for another bumper Singles Day

Online shopping on Taobao and TMall may rise 30 per cent to 600 million transactions on November 11

PUBLISHED : Monday, 19 September, 2016, 10:04pm
UPDATED : Monday, 19 September, 2016, 11:00pm

Alibaba Group, the world’s largest retailer, said it’s bracing for a bumper day on November 11, when China’s online shoppers are expected to log 600 million transactions through its Taobao Marketplace and TMall platforms.

This year’s transactions on Singles Day - denoted by the numbers 11.11 - may increase 30 per cent from last year’s 467 million, according to Judy Tong, chief executive of Cainiao Network Technology, which coordinates the deliveries and handles the data of transactions on Taobao and TMall.

“We are fully prepared for deliveries, even if the deal number breaks through 600 million,” Tong said in an interview. “Cainiao has been gelling with our partners to get the job done.”

Purchases on Singles Day - started and trademarked by Alibaba in 2012 - have become a bellwether of consumer demand in the world’s most populous country, in the same way that the annual Black Friday shopping spree after Thanksgiving Day sets the tone for the US Christmas shopping season.

Taobao and TMall sites are already among the 20 most frequently visited websites on earth. Their combined November 11 sales rose 54 per cent last year to US$14.3 billion, after increasing 60 per cent in 2014 to US$9.3 billion.

Founded in 2013, Cainiao now partners with the top 15 delivery firms in China and processes 42 million packages a day.

Online sales this November may top 130 billion yuan (US$19.5 billion), according to an estimate by Guotai Junan Securities’ analyst Ray Zhao, who recommends clients “Buy” the stock.

“This year, we anticipate more brands will have their celebrity endorsers take part in live webcasts of Singles Day marketing campaigns in order to interact directly with consumers,” Zhao said. “In the meantime, other mainland media portals owned by Alibaba, such as Youku Tudou, can also help direct their traffic to Taobao to boost transactions.”

To be sure, China’s online shopping boom is showing signs of losing steam, according to Bloomberg’s chart analytics.

Online retail sales, including goods and services, climbed 26.7 per cent this year through August, according to China’s statistics bureau data.

That was the lowest reading in the data that go back to the end of 2014, a year when web and app sales soared 49.7 per cent.

To weather the slowdown, Alibaba is making use of data gleaned from its online platforms and from its understanding of shoppers’ preferences to peddle more products. The company also owns a business in cloud computing.

Alibaba, owner of the South China Morning Post, said it is doubling efforts to offer a wider range of foreign-made consumer goods to cater to mainland Chinese shoppers this year.

Affluent mainlanders’ increasing penchant for overseas-made goods ranging from babies’ nappies and milk powder to chocolate and biscuits has given rise to a soaring number of investments into cross-border e-commerce, with companies such as giant developer Greenland rushing to set up mammoth trading platforms to facilitate purchases and commodity flows.

Beijing published guidelines governing cross-border e-commerce early this year, which are likely to make customs procedures and commodity inspections more stringent to better regulate the potentially huge market.

We think it has become a trend that the Singles Day contributes more heavily to Alibaba’s fourth-quarter sales
Mitchell Kim, analyst, Maybank Kim Eng

Analysts said that only large players which have partnerships with a number of foreign brands and own a vast network of warehouses at home and abroad could secure a ticket to the business given the authorities’ harsh stance on cross-border shopping.

“Instead of purely focusing on transactions, we see an encouraging sign that Alibaba is now trying to use Big Data to sell products that are really customised for individual customers, as Chinese shoppers become more sophisticated,”said Mitchell Kim, an analyst with Maybank Kim Eng, which also has a “Buy” recommendation on the stock. “We think it has become a trend that the Singles Day contributes more heavily to Alibaba’s fourth-quarter sales..”

In the previous two years, Alibaba’s share price declined after Singles Day numbers were announced.

Alibaba’s shares have risen 28 per cent this year, giving the Hangzhou-based company a market value of US$261 billion, making it Asia’s largest company by market capitalisation.

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