How Alibaba Made Singles’ Day the World’s Largest Shopping Festival - EcoFinBiz Blog

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How Alibaba Made Singles’ Day the World’s Largest Shopping Festival

Valentine's Day can be a lonely time if you don't have a partner. But, at least in China, there's a holiday that celebrates singledom too. Aptly named Singles' Day, the unofficial holiday is a multi-billion dollar sales event bigger than Black Friday and Cyber Monday combined, and it’s happening this weekend.

The annual celebration is always on November 11 - or 11/11, a date chosen for its likeness to “bare sticks”, which is Chinese slang for bachelors. Although it was conceived in the 1990s by a group of college students protesting traditional couple-centric festivals, the event’s exponential growth is all down to China’s number one e-commerce site, Alibaba.

In 2009 the retail giant took Singles' Day and promoted it as an opportunity for consumers to splurge on gifts to themselves, offering steep discounts through its consumer shopping site, Tmall.

That first year, the gross merchandise value (GMV) of goods ordered during the sales period clocked in at $7.5 million. Even though GMV is a questionable metric, since it doesn’t necessarily reflect net revenues, the figure's sensational growth is worth noting.

Within eight years, Singles' Day GMV had ballooned to over 3,000 times its 2009 level, hitting $25.3 billion in 2017 with Chinese consumers racking up $1 billion of purchases in just the first two minutes of Singles' Day. For comparison, it took Amazon 30 hours to cinch that same value during its Amazon Prime Day sales the same year.

Alibaba combines online shopping discounts with offline entertainment to give its Singles’ Day sales a boost. Since 2015, it has hosted extravagant annual galas to launch the day’s festivities. These televised events draw in an audience of around 200 million viewers, who tune in to catch product launches, win prizes, and witness A-list celebrities make bewildering appearances.

Highlights from last year's gala include Pharrell Williams performing an original ode to Singles' Day, Jessie J offering an unironic rendition of her hit song Price Tag, and Nicole Kidman introducing a short kung-fu film starring Alibaba co-founder Jack Ma. That film itself was bursting with martial arts royalty, with Ma sparring against opponents like Jet Li and Donnie Chen.

Underpinning the festival's success is Alibaba's logistics network, Cainiao, which boldly handles the deluge of orders surging throughout the day. In 2017 over 331 million boxes were dispatched on Singles' Day, with the first order taking just 13 minutes to reach its destination (a customer in Shanghai had bought some snacks).

Achieving such fluidity in a nationwide logistics network is certainly a marvel. Last month Cainiao unveiled an almost fully automated warehouse in preparation for another blockbuster Singles' Day. The warehouse can supposedly process orders 50% quicker than entirely-manned facilities.

But each additional package processed adds strain on the environment. Last year parcels from Singles' Day generated an estimated 160,000 tons of packaging waste, only 10% of which is recyclable.

Also, for all its bluster, the sales event is not necessarily a windfall for merchants. Sellers have complained of being pressured into offering excessive discounts during the event, slashing prices over 50% and occasionally shipping items at a loss.

With Alibaba suffering one of its worst performing years, whether Singles' Day continues its strong performance this weekend will be closely watched. The company's stock has crashed 21% since January and reports from the previous two quarters have been troubling, warning of weaker sales to come.

But there's a bigger picture too. Analysts see Alibaba's performance as a bellwether for the Chinese economy, which is driven by consumption. A weak Singles' Day could signal a loss of confidence in the economy as China is battered by tariffs and burdened with debt. So whether it's for the razzle-dazzle of the gala or the data behind the sales, all eyes will be on Alibaba this November 11.

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