China’s biggest online shopping day – the now-famous “Singles Day” (11/11) that has become the Chinese equivalent of “Black Friday” in the United States – began setting records right away, with Alibaba selling more than US$1 billion in the first five minutes and $7.2 billion in the first two hours of shopping. The online retail giant walked away with a total of $17.8 billion at the close of the 24-hour selling period – but it still wasn’t enough.
At the end of the day, Alibaba was unable to meet analysts’ high expectations for growth. Last year, the marketing gimmick increased sales by 60 percent, compared to 2014, reaching $14.3 billion (other estimates put these figures closer to 54 percent growth and $13.36 billion, respectively). This time around, concerns about China’s slowing economy and worsening rhetoric around U.S.-China trade induced analysts to temper their forecasts, with a 45 percent rise ($20.7 billion) – still considered a strong showing by the Chinese e-commerce giant. But the final tally for the sales frenzy even fell $2.2 billion short of this reduced estimate.
The financial media breathlessly covered this “key litmus test” of China’s economy, and international brands made a concerted effort to increase their cross-border sales yesterday, trotting out the likes of celebrities Victoria Beckham and Kobe Bryant to induce Chinese consumers to break out their wallets.
The BBC reported that Alibaba’s sales were closer to $15 billion, with four hours to go on the 24-hour countdown, still $5 billion shy of what many had hoped to see. “Growth has taken a significant hit,” Patty Cao, an analyst at Aberdeen Asset Management, told the British news service. “Events like Singles Day are important indicators to feel the pulse of China’s economy.”
Nine hours before the event ended, Reuters noted that “growth was markedly slower than in 2015, as shoppers sought even bigger price cuts.”
However, while sluggish sales, slowing personal income growth, and a strong U.S. dollar are all bad news for Alibaba, another factor in the disappointing results could be a more competitive domestic online marketplace, where other Chinese e-retailers, such as JD.com, made a concerted play for some piece of the lucrative Singles Day action.
