Growth slows on record sales during Singles' Day

Mr Ma, founder of Alibaba, speaking in front of a screen displaying his company's sales figure during the Singles' Day festival in Shenzhen on Friday. Analysts say that although the day's turnover is only a fraction of the online retailer's total ann
Mr Ma, founder of Alibaba, speaking in front of a screen displaying his company's sales figure during the Singles' Day festival in Shenzhen on Friday. Analysts say that although the day's turnover is only a fraction of the online retailer's total annual sales, it acts as a confidence index for the firm.PHOTO: ALIBABA GROUP

Weaker Chinese economy curbs turnover growth for Alibaba and other online retailers

SHENZHEN • Chinese online retail behemoth Alibaba posted record sales of 120.7 billion yuan (S$25.1 billion) during the Singles' Day festival, though the gala shopping day saw growth slow against the backdrop of an economy expanding at its slowest pace in a quarter- century.

The figure amounted to 68.2 per cent of the 177 billion yuan rung up by China's 16 biggest e-commerce sites, according to data provider Syntun.

On Alibaba's platforms, the best-selling items of the 24-hour event on Friday included Apple iPhones, Nike and Adidas gear and Haier appliances, the company said on its official blog.

Total sales on Alibaba Group Holding's platforms marked a 32 per cent rise from last year's 91.2 billion yuan turnover, but the increase was significantly lower than the 60 per cent rise logged last year, amid a more saturated domestic online retail market, a weaker economy and sluggish personal income growth hitting consumers' wallets.

Alibaba's United States-traded shares fell 2.7 per cent at 11.27am on Friday in New York.

  • FIGURES FROM SINGLES' DAY SHOPPING SPREE

  • This year's Singles' Day shopping event in China eclipsed all previous records as consumers scooped up deals during the 24-hour spree on Friday.

    Here are the event's main figures:

    SALES: 177 billion yuan (S$36.7 billion) at the 16 biggest e-commerce sites. Top retailer Alibaba took 68.2 per cent, followed by JD.com and Suning.com

    NO. OF BRANDS: 39,487

    NO. OF COUNTRIES/REaGIONS REPRESENTED: 220 (buyers)

    DELIVERY ORDERS: 1.07 billion

    MOST POPULAR TRANSACTION CHANNEL: Mobile phones. Some 82 per cent of transactions were carried out on a phone.

    XINHUA

Alibaba chairman Jack Ma played down the importance of the final figure in a speech shortly before midnight, echoing other executives who spoke during the day.

"(Singles' Day) is not about a number only," said Mr Ma. "When volumes started to grow a little less fast, I actually became more relaxed." He added: "We don't want to cause the entire logistics system to collapse."

China's No. 2 e-commerce giant JD.com, which focuses more on electronics, said its sales total - which it did not specify - also surpassed last year's figure.

Singles' Day was invented by college students in the 1990s as a counter to Valentine's Day. Written numerically, Nov 11 is reminiscent of "bare branches", a local expression for bachelors and spinsters.

KEEPING A STEADY PACE

(Singles' Day) is not about a number only... When volumes started to grow a little less fast, I actually became more relaxed... We don't want to cause the entire logistics system to collapse.

ALIBABA CHAIRMAN JACK MA, downplaying the importance of the final figure.

Alibaba pioneered the annual Singles' Day-themed shopping spree in 2009 and has since transformed it into a social phenomenon, replicated by rivals such as JD.com and now involving thousands of marquee labels worldwide.

It now offers a benchmark for Alibaba's performance and an insight into China's swing to online shopping, especially by smartphone, to the detriment of brick- and-mortar stores.

Around 82 per cent of total sales were via mobile devices, up strongly from last year. The day itself is a double-edged sword for many. Couriers and packaging firms say low prices and steep competition meant profit margins were slim despite large sales volumes.

Retailers are also starting to feel the pinch. The average cost per order shrank to 184 yuan from approximately 194 yuan last year, according to the unaudited metrics released by Alibaba.

Cut-throat competition for customers has also caused concern over false advertising and massaged statistics. Last week, China's business regulator advised mainland online shopping platforms to guard against suspect sales tactics.

Analysts said the event is key to Alibaba.

The day's turnover was only "a very small fraction of its total annual sales", independent e-commerce analyst Li Chengdong said, but it was "a confidence index for the firm".

"If they do well in this, it is a boost to investors' confidence," he said.

REUTERS, BLOOMBERG, AGENCE FRANCE-PRESSE, XINHUA

A version of this article appeared in the print edition of The Sunday Times on November 13, 2016, with the headline 'Growth slows on record sales during Singles' Day'. Print Edition | Subscribe