Saturday , October 23 2021

Singles day: how Alibaba created the biggest shopping festival in the world



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Valentine's Day can be a lonely moment if you do not have a partner. But, at least in China, there is a holiday that also celebrates the bachelor. Aptly named Single Day, the unofficial holiday is a multi-billion dollar sales event bigger than Black Friday and Cyber ​​Monday combined, and this is happening this weekend.

The annual celebration is always on November 11 – or 11/11, a date chosen for its resemblance to "bare sticks," which is the Chinese slang for singles. Although it was conceived in the 1990s by a group of university students protesting against traditional couples festivals, the exponential growth of the event is linked to the number one of China's e-commerce site, Alibaba.

In 2009, the retail giant celebrated Singles Day and promoted it as an opportunity for consumers to spend gifts for themselves by offering huge discounts on their consumer shopping website, Tmall.

In that first year, gross merchandise value (GMV) of goods ordered during the sales period was $ 7.5 million. Even though GMV is a questionable metric, since it does not necessarily reflect net revenues, the sensational growth of the figure is noteworthy.

In eight years, the GMV for Singles Day has risen to 3,000 times its 2009 level, reaching $ 25.3 billion in 2017, with Chinese consumers hoarding $ 1 billion in purchases in the first two minutes of Singles Day. For comparison, Amazon took 30 hours to get the same amount during Amazon Prime Day sales that same year.

Alibaba combines online shopping discounts with offline entertainment to boost its sales on Singles' Day. Since 2015, it has held extravagant annual gala to launch the festivities of the day. These televised events attract an audience of about 200 million viewers, watch product launches, win awards and witness top-notch celebrities making bizarre appearances.

Highlights from last year's gala include Pharrell Williams presenting an original ode to Singles' Day, Jessie J offers a non-metallic rendition of her hit Price Tag, and Nicole Kidman features a small kung-fu movie starring Alibaba co-founder Jack Ma. The film itself was filled with martial arts royalty, with Ma fighting against opponents like Jet Li and Donnie Chen.

The success of the festival is at the core of Alibaba's logistics network, Cainiao, which bravely faces the deluge of requests that have increased throughout the day. In 2017, more than 331 million boxes were despatched on Singles Day, with the first order taking only 13 minutes to reach its destination (a customer in Shanghai bought some snacks).

Achieving such fluidity in a national logistics network is certainly a marvel. Last month, Cainiao unveiled an almost fully automated deposit in preparation for another single-day blockbuster. The warehouse can supposedly process orders 50% faster than fully equipped facilities.

But each additional package processed increases the pressure on the environment. Last year, Singles Day orders generated about 160,000 tonnes of packaging waste, of which only 10% are recyclable.

In addition, for all its aggressiveness, the sales event is not necessarily a surprise to marketers. Sellers complained of being pressured to offer excessive discounts during the event, cutting prices above 50% and occasionally shipping items at a loss.

With Alibaba suffering one of its worst performances, if singles day continues its strong performance, this weekend will be closely watched. Shares of the company fell 21% since January and reports from the previous two quarters were worrisome, warning of weaker sales to come.

But there is also a bigger photo. Analysts see Alibaba's performance as a thermometer for the Chinese economy, which is boosted by consumption. A poor day of singles may signal a loss of confidence in the economy, as China is hit by tariffs and burdened with debt. So whether it's the charm of the gala or the data behind the sales, all eyes will be on Alibaba this November 11.

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