Why Alibaba is moving its Singles' Day sales command centre to Beijing for the first time

Journalists look at a screen showing real-time data of transactions at Alibaba Group's 11.11 Global shopping festival in Beijing.
Journalists look at a screen showing real-time data of transactions at Alibaba Group's 11.11 Global shopping festival in Beijing.PHOTO: REUTERS

BEIJING (BLOOMBERG) - It could be Mr Jack Ma's best chance at reversing his company's US$55 billion (S$78 billion) plunge in market value this year.

China's biggest e-commerce emporium is moving the base for its annual Singles' Day shopathon - starting from midnight on Nov 11, 2015 - from Hangzhou to the former Olympic aquatics centre in the captal.

For the first six years after the Singles' Day promotion was started by Alibaba on Nov 11, 2009, the results were tabulated during a ceremony held at the company's headquarters in Hangzhou, eastern China. The command centre is moving to Beijing this year.

Singles' Day is celebrated on Nov 11 because the date-11/11-is reminiscent of "bare branches," the Chinese expression for bachelors and spinsters.

Last year's online event generated US$9.3 billion in sales, capping a four- year stretch where annual growth for the day averaged 227 per cent. Some of the world's most popular brands - including Apple, Nike, Lego- have flooded Alibaba's websites with promotions and discounts. Xiaomi is gearing up to sell as many as two million smartphones on Wednesday.

Alibaba is adding some star power to the event this year, with a guest list that includes US singer Adam Lambert and Chinese film director Feng Xiaogang, known for his top-grossing comedy films. Celebrities from Taiwan and China including pop singer Jolin Tsai, actress Vicki Zhao, Mandopop singers Jane Zhang and Amber Kuo, and boy band TFBOYS were also invited to a Nov 10 gala ahead of the sales rush, according to a Barclays report.

Shifting from its Hangzhou home to the heart of Chinese power shows Alibaba's ambitions to maintain growth, penetrate the northern region where rival JD.com Inc. is based and answer the government's call for "national champions" in technology.

"The move is symbolically significant because it indicates that Alibaba, by moving to the capital, is China's indisputable e-commerce leader," said Mr Cyrus Mewawalla, managing director of London-based CM Research.

"Politically, it might be a tacit acknowledgment that Alibaba, a national champion, now has to be closer to China's authorities and more in tune with the government's strategic interests."

Going to the political, economic and media hub comes after Alibaba's roller-coaster first year as a public company. A record offering was followed by a record fall below the initial price, allegations the company wasn't doing enough to fight counterfeits on its platforms, and the replacement of its chief executive officer Jonathan Lu.

Simultaneously, China's economic expansion slowed to a 25-year low, putting pressure on corporate profits. Yet Alibaba was able to post quarterly sales that climbed by almost a third after it boosted advertising targeting shoppers able to hold on to more of their money. Last year, Alibaba began pushing international expansion for the first time, generating sales to more than 200 countries.

Here are five points that illustrate just how big the phenomenon is:

  • Analysts expect sales to surge to a new record. Last year, Alibaba sold more than US$1 billion worth of products in the first three minutes of the sales;
  • Total sales on Singles' Day zoomed up to US$9 billion within 24 hours, or four times bigger than the US's Cyber Monday, named after the rise in online retail sales the Monday after Thanksgiving;
  • More than one million products were placed on sale last year, according to Comscore;
  •  Customers this year will be able to choose from more than 6 million products from around 40,000 merchants and 30,000 brands;
  • China Post, the country's postal service, estimates that 760 million packages will be shipped by various Chinese e-shopping sites to customers on Wednesday, up significantly from 540 million packages produced last year.

Alibaba estimates that 1.7 million deliverymen, 400,000 vehicles and 200 airplanes will be deployed this year to handle packages holding everything from iPhones to underwear.

Consumers are expected to spend an average of 1,761 yuan (S$394) per person, up 22 per cent year on year, according to a Nielsen survey of more than 1,000 Chinese Internet users.