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Behind Alibaba’s $5 billion e-commerce day
Deals with retail chains and sales of travel and financial products contributed to a record sales day.
Senior editor, China
China often produces eye-popping economic statistics, and that includes the report this week from Alibaba Group Holding Ltd. that its two big online marketplaces booked $5.75 billion in sales during the annual one-day Singles Day sale. While merchants on Tmall and Taobao sold plenty of conventional merchandise, the sales Alibaba reports also include substantial revenue from selling financial and travel products, and deals with store-based merchants.
Alibaba, China’s dominant e-commerce company and No. 1 in the Internet Retailer Asia 500, bolstered its Singles Day sales—which were almost double last year’s $3.0 billion—with several new features.
A big one was the introduction of financial products such as insurance policies and bond funds. Alibaba obtained government approval shortly before the Nov. 11 Singles Day sale to offer financial services, and the Taobao Licai (Licai means “wealth management”) section of the Taobao marketplace generated $149 million in revenue on Singles Day, Alibaba says. (Singles Day comes from the 11.11 notation for Nov. 11, and Alibaba began promoting it as a big day for online sales in 2009, with many other merchants coming on board in recent years.)
Another new features was an “O2O”—offline to online—partnership with such major store-based retailers as Gap Inc., Toys ‘R’ Us Inc. and Japanese fast-fashion retailer Uniqlo Co. Ltd. to promote Singles Day sales through 30,000 stores in 1,000 Chinese cities. The stores offered deals in advance of Singles Day that consumers could select, completing the purchase online on Nov. 11. For example, shoppers could scan a QR code on posters at Gap stores to get $3 off purchases on Gap’s Tmall storefront on Nov. 11.
The promotion was designed to drive consumers into participating stores in advance of Nov. 11 as well as to stimulate buying on Singles Day. Gap did not respond to a request for comment on its Singles Day results.
Alibaba also stimulated demand by sending out $50 million worth of digital coupons in advance of the sale. Some of the coupons were specifically designed to drive purchases through mobile devices or on social networks.
Travel products also boosted sales on the Alibaba sites. Bargain hunters snapped up 60,000 travel packages in the first 12 hours of the Singles Day event, generating $25.8 million in revenue, Alibaba says. The company has not disclosed full-day travel sales.
Alibaba says it shipped 60 million parcels on Monday, the same day orders were placed, out of the 152 million it expected to ship to fulfill all Singles Day orders. Contributing to the fast delivery were the services of a new logistics company called Cainiao Network Technology Co., created this year by Alibaba and six major Chinese delivery firms. During the Singles Day period Cainiao advised merchants on inventory planning and helped delivery companies plan to handle the spike in demand, Alibaba says.
While the Singles Day online sale is most associated with Alibaba, which introduced the sale in 2009 to promote its Tmall marketplace aimed at larger brands launched the previous year, many other Chinese merchants also promoted online sales on Nov. 11. In some cases, they extend the sale beyond just the one day in order to better compete with Alibaba’s dominant marketplaces. Here are some Singles Day results from other web merchants:
• Alibaba’s nearest competitor, Jingdong Century Trading Co., racked up $1.6 billion in sales in a two-day event that spanned Nov. 11-12. Last year, Jingdong, No. 3 in the Asia 500, sold $410 million in a three-day event. Customers placed 6.8 million orders in the first day of this year’s sales, the retailer says. Orders from mobile devices increased five times.
• From Nov. 8 to 11, Suning.com, the e-commerce site of consumer electronics and appliance retailer Suning Commerce Group Co. Ltd. generated 6 million orders. Sales from mobile devices increased 900% from last year, says Suning, No. 5 in the Asia 500.
• Jiuxian.com, the largest Chinese online wine retailer and No. 33 in the Asia 500, increased its Singles Day sales 267% to $36.3 million, from $9.9 million a year ago. Besides its own site, Jiuxian also sell wines through its store on Tmall.com.
• On Nov. 11, Yixun.com, a retailer of consumer electronics and general merchandise, booked 600,000 orders worth $82 million.