Singles Day this year once again smashed sales records for China’s major e-commerce platforms. If the year’s most popular shopping event is a barometer of the country’s economic health, as often perceived, the patient is on their way to a full recovery from the year of Covid. But Chinese e-commerce titans didn’t reach GMV heights the old-fashioned online way. New bells, whistles, and windows made it all possible.
Singles Day owes its origins to Alibaba, which back in 2009 decided to make over Nov. 11, then best known as an anti-Valentine’s Day. Also known as Double 11, Singles Day was first marketed as an opportunity for singletons to cheer themselves up with a little frivolous spending on discounted wares. Twelve years later, Singles Day is a multi-day extravaganza patronized by nearly everyone in China and in many places beyond.
Alibaba booked RMB 498.2 billion ($74.1 billion) in gross merchandise volume (GMV) during the promotional period stretching from Nov. 1 to Nov. 11. That figure was 26% more than the company booked for Singles Day in 2019, and represented the fastest growth rate in three years, according to Jiang Fan, president of Alibaba’s affiliate sites Tmall and Taobao. To put the figure into perspective, sales were double the net worth of MacKenzie Scott, the ex-wife of Amazon chief Jeff Bezos and the richest woman in the world.
Meanwhile, Alibaba rival JD.com recorded RMB 271.5 billion in GMV during Singles Day, an increase of 33% on the company’s 2019 figure for the period. Despite the skyrocketing GMV, JD expects a lower operating margin for the fourth quarter of the year, partially due marketing expenses for promotional events like Singles Day.
Record-breaking billions aside, more interesting is how Alibaba and other online players kept the retail game ball rolling and the smartphones clicking amid a macro environment complicated by intensified competition, trade tensions, and a global pandemic.
11 days of Singles Day
First of all there were the extended sales windows, with novel ordering conditions. For Chinese online buyers, Singles Day isn’t only about Nov. 11 any more.
Nov. 11, the date which was the source of the festival, has become less important in terms of generating sales. China’s overall e-commerce sales across platforms for Nov. 11 dropped to RMB 332.87 billion from RMB 410.1 billion booked last year, according to data from China-based data services company Syntun.
Instead, Alibaba mounted two sales periods. First came “pre-sales,” during which customers put down deposits to guarantee a discount later. These spanned two phases: Oct. 21 to Oct. 31, and Nov. 4 to Nov. 10.
The actual sales took place during the traditional 24-hour shopping window on Nov. 11, and in a new one from Nov. 1 to Nov. 3. Pre-sale customers had to log back into the app during this time to complete their transactions, and other products went on sale.
Alibaba’s GMV from Nov. 1 to 00:30 am Nov. 11 was RMB 372.3 billion, contributing nearly 75% of the total GMV Alibaba achieved during this year’s 11-day Singles Day shopping festival, which means people are mostly done shopping before the typical Nov. 11 shopping window starts.
A lengthened Singles Day allowed consumers to take more time to browse and grab deals, couriers to have less pressure in processing the orders, and merchants to get more exposure and selling opportunities, according to Alibaba. And foremost, it was a spur to consumption.
But a dozen customers TechNode spoke to had grown tired of spending much time on Singles Day shopping.“ This year’s Singles Day was over for me after I paid to hold several pre-sale orders on Nov. 1. I’ve already got most of the stuff I want to buy,” said Deng Shuang, mother of a five-year-old based in Shanghai.
Different sales lenses
The two checkout periods have led to a new approach for calculating and reporting GMV. “That means we’ll have to live with less frequent GMV updates, and need to look at Singles Day consumption “through different lenses,” said Agency China’s Norris. GMV is an important figure for observers to translate the performances of e-commerce platforms during high-profile sales like Singles Day and 618. Alibaba’s release of 11-day sales will make its figure directly comparable with JD, which has always disclosed 11-day figures for the event.
The two e-commerce platforms have been involved in a public spat over different ways of calculating GMVs. In 2017, Alibaba public relations head Wang Shuai mocked JD for releasing an extended 11-day Singles day sales figure, saying, “JD could calculate their annual orders for Singles Day for as long a period as it wants.”
Xu Lei, then chief marketing officer and now chief executive officer of JD Retail, fought back, suggesting that Alibaba’s massive 24-hour GMV is driven by pent-up consumption from users who all wait to place orders on Nov. 11 in order to get a discount. “If you start the pre-sale 20 days early (which practically halts sales because customers know they can buy the same product at a better price on Singles Day) and account all the GMV for one day, why can’t we let the merchants to do their business normally and count the 11-day sales?”
Meanwhile, the smaller players are more reluctant to present their Singles Day figures. As usual, Pinduoduo didn’t release sales figures for any shopping events, whether for Singles Day or for 618. The company’s explanation: Their users don’t need to wait for twice-yearly sales to get the best value for their money because they get the best value on Pinduoduo platform “every single day.” Another Singles Day participant, Suning, only says its online orders surged 75% from Nov. 1 to 11.
Livestreaming at center stage
Livestreaming, which has created a lot of buzz all year long, also stimulated consuming appetites.
Livestreaming sales this year have become an “indispensable marketing tool,” Alibaba says. Although it released no total livestream figures for the 11-day festival, the company claims that 33 livestreaming channels generated more than RMB 100 million in GMV each, and over 500 channels generated RMB 10 million each during the period. Despite the impressive numbers, the market should remain wary—data faking is running rampant in the industry.
By rough comparison, livestream sales represented 7.5%—about RMB 20 billion—of the group’s overall GMV of RMB 268.4 billion on Nov. 11, 2019.
Research firm KPMG expects China’s livestream e-commerce market to be worth RMB 1.05 trillion this year, double the RMB 433.8 billion figure of 2019. In addition to the traditional KOL-endorsement model, livestreaming is increasingly part of the way brands do digital marketing and brand communication. Stores take the lead to run their own livestreaming sales; 70% of transactions on the Taobao Live originated on merchants’ self-run livestreams, according to Taobao Live.
Despite Singles Day’s popularity and its stimulating economic effect, there is no guarantee that the event and its shopping festival siblings will continue their galloping annual growth. Unhealthy spending behaviors are attracting increased public scrutiny.
Anxiety about debt-funded consumption
One week before Singles Day launched, Netease Yanxuan, a private brand e-commerce platform backed by game giant Netease, declared it was “quitting” this year’s shopping battle. The company claimed its goal was “rational spending” in a fight against “overconsumption” and “complicated discount gimmicks.”
Although the firm also says it plans to bring the “most steep discounts of the year,” NetEase’s declaration resonated with many online buyers, who have been bombarded with sales since the beginning of this year.
Singles Day comes on the heels of the 618 and Golden Week shopping events, as well as Singles Day’s little brother Double 12 and Black Friday. It’s no surprise then that analysts are detecting consumption fatigue among consumers. There is less need for consumers to engage in a shopping frenzy at a particular time since the discounts are always there, Norris points out.
Despite the exhaustion, e-commerce platforms still posted huge figures— Zhuang Shuai, founder of Beijing-based consulting firm Bailian, said many consumers just can’t pass up participating in a big event. “From a consumer psychology point of view, the bandwagon effect will take hold, leading to more consumption when buyers are under the broader influence of platform and merchant promotions as well as the media,” he says.
People are also worrying that platforms trap compulsive shoppers into spending more than they can afford. Said Yan Li, a 34-year-old Shanghai doctor who shops online only when absolutely necessary: “I seldom rush-buy. These made-up shopping festivals driving impulse buying feel like April Fools’ Day to me.”
A good-humored buzz term went virtual on Chinese social platforms this season: “balance payers” (weikuanren), referring to the shock impulse pre-buyers face when the payment period arrives after a week of pre-sales.
They are also the so-called hand-choppers (duoshoudang)—the addicts who just won’t stop buying unless they lose their clicking finger. The country’s fintech and online lenders, which have come to the rescue of these impulse buyers, owe much of their rise (in Chinese) in the past few years to the attractions of the top festivals of consumerism.
Regulators have started to ask tough questions about this business model, suggesting that we may soon see new rules to limit consumer debt. A central bank-linked commentary that preceded Ant Group’s IPO fiasco accused Ant’s Huabei debt product of tricking Taobao customers into borrowing more than they intended or could afford.
However, Esme Pau, an analyst at equity firm China Tonghai Securities, remains optimistic and believes the latest round of consumer finance regulatory tightening will have “limited impact” on the GMV growth of e-commerce platforms during shopping festivals.
“The new online lending guidelines primarily impact Jiebei [which is primarily used for offline consumption], rather than Huabei [primarily used for e-commerce]. Jiebei has higher APR [annual percentage rate], lower registered capital and higher leverage,” she says.