Alibaba’s star-studded 11.11 Countdown Gala was nothing shy of an elaborate New Year countdown with appearances from megastars such as Jay Chou and Mariah Carey. Yet this year’s Singles’ Day was a mix of milestones and setbacks.
Alibaba’s Singles’ Day hit RMB 1 billion (around $144 million) in sales in just 21 seconds and recorded a whopping RMB 213.5 billion in sales during the 24-hour shopping event, topping last year’s record. But despite record-breaking sales, Alibaba’s Singles’ Day sales growth fell from 39% to 27%—the slowest in the shopping fiesta’s 10-year history.
“Today we witnessed the strength and rise of China’s consumption economy and consumers’ continued pursuit to upgrade their everyday lifestyles,” Daniel Zhang, CEO of Alibaba Group said. “Looking ahead, Alibaba will continue to lead the evolution towards the future digital economy and lifestyle.”
Singles’ Day is hailed as the Olympics for Chinese merchants. Alibaba’s competitors also cashed in from Double 11 shopping extravaganza. Its biggest rival, JD, broke its own recorded RMB 159.8 billion ($22.9 billion) during its Singles Day sale event that went from November 1 to 11.
The day saw a record-breaking number of orders this year. Cainiao Network alone processed more than 1 billion delivery orders on the shopping day, which, to put it in context, is equivalent to the volume of delivery orders processed in the UK over 4 months.
“We shouldn’t expect Singles’ Day to grow at an astonishing rate each year,” said Michael Norris, research manager at consulting firm Resonance. “As with all things, competition, inertia and the ‘law of big numbers’ eventually kicks in, dragging on the growth rate.”
Norris noted that there has been some slowdown in consumption in China’s wealthier coastal cities, the region that drives Singles’ Day sales in China, due in part, he said, to growing economic pressure—especially around housing affordability, the recent stock market slump and high education costs.
Despite reporting better-than-expected results, earlier this month Alibaba lowered its forecast for 2019, which CEO Daniel Zhang said was due to “fluid macro-economic conditions.”
In China, there is a year-round of online shopping festivals launched by retailers who hope to the profit the most from the lucrative e-commerce market.
“Singles Day’ sales are increasingly cannibalized by earlier sales events,” Norris noted, adding that this year JD’s 618 shopping event achieved sales of $24.7 billion, which came near to Alibaba’s Singles’ Day result last year. “Earlier sales events reduce wallet share that Singles’ Day would have otherwise captured,” Norris said.
Incumbent e-commerce players also saw increasing competition from newcomers. Pinduoduo, a rising star in e-commerce who targets users residing in lower-tier cities, surpassed its last year sales just 9 hours in.
Specifically, the social e-commerce platform received 40 million orders of farm produce (in Chinese), 12 million of which it said would be shipped from poor counties as part of its initiative to fight against poverty through increasing urban-rural trade.
Green advocates have criticized China’s burgeoning e-commerce industry, describing the consumption push as a “catastrophe for the environment.”
(If you can’t see the video above, try watching on QQ instead.)
New retail, new tactics
New retail was a concept coined by Jack Ma in 2016 and became the buzzword in 2017, but this year e-commerce players ramped up their efforts.
Hema Fresh, part of Alibaba’s new retail strategy, added two more stores to its 17 supermarkets in Beijing. According to Alibaba, the turnover of Hema supermarkets in China surpassed last year’s figure in just two hours of opening on Singles’ Day and nearly 800,000 users logged into its lifestyle app Koubei to place orders 30 minutes before the clock struck midnight.
Other e-commerce heavyweights also committed to integrating online-offline retail and saw positive results during Double 11. JD’s online grocery and delivery company, Dada-JD Daojia, also set a record of 10 million peak daily orders, and total sales were three times higher compared to the year before.
Aside from upgrading offline and online shopping experience, e-commerce players also tried out new tactics to lure the hand-choppers, an internet slang term used to describe those addicted to online shopping.
“I observed that some domestic and international brands adjusted discounts dynamically throughout the day. This is the first year I’ve seen the wide implementation of this tactic,” said Norris. “Larger discounts or additional freebies towards the end of the day are used to entice consumers to purchase items sitting in their shopping cart. Late afternoon and evening sales spikes show this tactic is relatively effective.”
The allure of overseas markets
Alibaba and Lazada, the e-commerce firm Alibaba owns and operates out of Southeast Asia, held joint Singles’ Day promotions across the region. After kicking off the event at midnight, Lazada’s GMV in Singapore spiked seven-fold compared to the year prior.
“We are fired up to continue building an inclusive and sustainable e-commerce ecosystem in the region with the goal of supporting eight million e-commerce entrepreneurs and SMEs to grow and thrive by 2030,” said Pierre Poignant, Lazada Group’s executive president.
Chinese consumer’s unfaltering love for international brands was on full display with more than 40% of Alibaba’s Singles’ Day shoppers buying from international brands. According to Bloomberg, in the first hour of this year’s shopping day, Japan, US and South Korea were the top countries selling to China.
Clarification: This post has been updated to clarify that Lazada’s sales increase refers to GMV in Singapore only.