Last year, Alibaba broke all records with sales of $14.3 billion on Singles Day. We take a look at how it managed to do that and hear from two professors about what’s in store for the company this time around.
China’s Singles Day shopping fest, also known as Shuangshiyi (or ‘Double Eleven’, since it takes place on November 11th), is the world’s biggest online shopping frenzy, last year achieving unprecedented success in terms of sales, participation rate, customer engagement and media influence.
Company data put the total gross merchandise volume (GMV) on Alibaba’s shopping platforms at a record-breaking $14.3 billion (RMB 91.2 billion) in 2015, outpacing 2014’s $9.3 billion (RMB 57.1 billion) by a dramatic 60%.
This year should be bigger still – but by how much? “I expect lower growth this year, in the range of a 30-50% increase over last year,” says Teng Bingsheng, Associate Professor of Strategy at the Cheung Kong Graduate School of Business (CKGSB) in Beijing. “If so,” he adds, “It will still be great achievement.”
Already significantly bigger than the US shopping festivals of Black Friday and Cyber Monday combined, Singles Day was first invented by Alibaba’s Tmall in 2009 and has since grown exponentially, especially as rival companies like JD.com and Suning have joined the fray. But can Alibaba ever hope to “reclaim” this event as its own?
“To some extent, people remember that Alibaba initiated the 11.11 shopping festival,” says Teng. “However, other brands are quickly gaining their fair share as well. But as long as the whole pie – and Alibaba’s own business – both get bigger, it’s still good news.”
“Double Eleven used to last for 24 hours, but this year it will stretch for 24 days,” adds CKGSB Associate Professor of Accounting Zhang Weining. “I think Alibaba foresaw that the sales growth rate would slow down this year, in part because more and more e-commerce platforms are running these campaigns and consumers are increasingly attracted to promotions offered prior to the day itself. This new strategy will also ease the pressure on delivery logistics, since sales will be more spread out.”
But Zhang adds that e-commerce in China has developed so quickly that Alibaba has almost reached its ceiling in this regard and must now look for other areas for growth. “Its potential now lies in three places,” he says. “Building an integrated overseas shopping market, promoting internationally brands that are only sold on Alibaba’s platforms and exploring the offline market.”
To read more about Alibaba’s success a year ago, click here.
In terms of technology, Chairman Jack Ma, a CKGSB alumnus, claims that Alibaba has the support of a computing system that is “[by] far the most advanced that human beings can realize”, with the company able to process a total of 140,000 transactions per second via its cloud arm Aliyun during the shopping peak, while payment arm Alipay processed an additional 86,000 transactions per second at peak sale time.
Inspired by Paypal, Ma started Alipay in 2003 to provide an escrow service for the online shopping site Taobao. Split from e-commerce giant Alibaba in 2013, Ant Financial, whose Chief Strategy Officer Chen Long is also a Professor of Finance at CKGSB, expanded at an unprecedented speed in the past three years and now it has an estimated market value of $75 billion.
The company also reportedly plans to list in 2017 in either Shanghai or Hong Kong—likely to be China’s largest IPO since 2010 when the state-owned Agriculture Bank of China offered $22.1 billion worth of shares.
To read more about Ant Financial’s stunning rise, click here.
