What started in the 90s by students at Nanjing University as an anti-Valentine’s day is now the world’s busiest shopping day. 11/11, known as Singles’ Day (光棍节 / 光棍節) on account that the date looks like “four lonely sticks” and bare branches on a family tree, was transformed in 2009 by Chinese e-commerce company Alibaba into the 11.11 Shopping Festival, a day when online retailers would prey on lonely hearts by offering discounts on products to promote some sort of shopping therapy. Alibaba trademarked the phrase “双十一” /”雙十一” (meaning “Double 11”) but indicated it is not likely to sue anyone who uses the term. Nevertheless, competitors have chosen to use their own phrases. JD refers to the date as “11.11” and Amazon China calls it 11.11 折学 /折學), literally “discount philosophy”.
This year, in the first two minutes and twenty seconds, 1 billion RMB (~160 million USD) in sales were made; and in the first hour, 2 billion USD. By the end of the day, a total of 9.3 billion USD (a figure that only counts Alibaba sales and transactions made through Alipay, a Chinese PayPal of sorts) in sales were made in 278 million orders (making the average sale about 33.45 USD), far surpassing last year’s final total of 5.8 billion USD. For comparison, sales during the last year’s Thanksgiving holiday in the United States from Black Friday through Cyber Monday totaled 5.3 billion USD. Yet, Alibaba’s stock dropped after Singles’ Day.
Following the sales tally has become a spectator sport with journalists acting as color commentators and posting updates on Twitter. One of the tags for Singles Day on Twitter was $BABA. This photo best shows the giant display that kept track of the sales and the number of people watching it. The final amount shrouded for a big reveal (if it’s an ongoing tally, at what point do they stop showing the real-time count?)
— Tech in Asia (@Techinasia) November 10, 2014
— Deirdre Bosa (@deeTVee) November 11, 2014
— Tech in Asia (@Techinasia) November 11, 2014
— Deirdre Bosa (@deeTVee) November 11, 2014
To ensure a shopping frenzy, Alibaba’s sales platforms like Tmall and Taobao requires sellers to offer discounts of at least 50% (partly symbolic, representing half a couple or a whole), but merchants go further. Slate points out a few:
“The hourlong “flash deals” for Singles Day on AliExpress include a casual men’s hoodie for $0.11 (discount: 99 percent; quantity available: 100), a vintage quartz watch with leather strap for $0.17 (discount: 99 percent; quantity available: 50), and a high carbon steel fishing hook set for $4.60 (discount: 92 percent; quantity available: unclear).”
What are they buying? According to Nielsen, clothing & accessories, cosmetics & personal care, household products, home electric appliances, and food and beverage are top 5 most popular categories.
Some merchants feel the deep discounts cut too much into profit margins and spend a significant amount on marketing for Singles’ Day. Nevertheless, they are hopeful for the business opportunities that may result from the investment.
More interesting to me is that mobile sales accounted for 42.6% of the gross merchandise value, up from 21% last year, and 5% from the year before. Another amazing statistic is that in 2009, Alibaba started with 27 merchants, and now there are 27,000 who participate through their system. Alibaba isn’t the only company that grew. Competitor JD, who owns about 22% of the e-commerce market, saw their sales increase 2.4 times from the previous year in the first 10 hours.
The sales figures should be taken with a grain of salt. The Wall Street Journal points out that Alibaba counts pre-orders from the preceding weeks that are paid in full on 11/11 towards its Singles’ Day count, and that Alibaba and JD have different standards for calculating gross merchandise volume, which Wikipedia defines as “a term used in online retailing to indicate a total sales dollar value for merchandise sold through a particular marketplace over a certain time frame”:
“Alibaba, as well as Chinese rival JD.com Inc. and eBay, also tally transactions regardless of whether they have been paid for. That means they could include the value of goods later canceled or returned—though they sometimes impose a threshold for how expensive those goods can be. Alibaba’s ceiling is 100,000 yuan, or about $16,000.
JD.com excludes from GMV goods that aren’t sold or delivered if they cost more than 2,000 yuan.
Both Alibaba and JD.com throw in the value of shipping charges.
A spokesman for Alibaba said that returns for Singles’ Day are in the single digits as a percentage of the total. Alibaba doesn’t disclose what percentage of orders aren’t paid for or returned on an annual basis.”
Alibaba has plans for further growth. Within China, it plans to reach out to second and third tier cities. Already, buyers come from over 200 countries and regions (a widely reported figure despite the fact that there are 196 countries in the world), but Alibaba wants the holiday to go international and has already studied the logistical framework needed. From the Alizila blog:
“By promoting this year’s 11.11 Shopping Festival, also known as Singles Day, as a cross-border bonanza in which overseas as well as Chinese consumers can participate, Alibaba Group will be challenging the international delivery networks and logistics partnerships its subsidiaries have been building upon for the last several years. Alibaba has reached agreements with governments and vendors from many countries, including the U.S., France and South Korea, to increase product offerings for this year’s online shopping spree.”
According to Nielsen, 60% of people in China who buy on Singles’ Day are married, and a quarter are single. FiveThirtyEight suggests countries which Alibaba could target for their high percentage of single people and people living with their parents. Businessweek is skeptical that the holiday will catch on in the United States, pointing out its potential overlap with Veterans Day and its proximity to the American shopping season.
Regardless of the actual sales figures for 2014 and future plans, there are a lot of packages to ship. The New York Times writes about the problems online retailers have had with transporting goods and other logistics generally and specifically with Singles’ Day:
“The Chinese e-commerce market is already bigger than that of the United States, and by 2020 is projected to be the size of those of the United States, Britain, Germany, Japan and France combined, according to a KPMG report.
But the country struggles with delivery, largely because of decades of underinvestment in inland logistics infrastructure and inefficient local regulation. Goods are slow to arrive in the interior of the country, and damage is a persistent problem, affecting both consumers and small businesses….
…Deliveries within China are so inefficient that the country spent 18 percent of its gross domestic product on logistics in 2013, 6.5 percent above the global average and 9.5 percent above developed countries like the United States, said Fox Chu, director of Asia Pacific infrastructure and transportation at the consulting firm Accenture.
‘Shipping goods from Fujian to Beijing can be more expensive than shipping something from Beijing to California,’ he said, referring to the roughly 1,200 mile trip between the southern Chinese province and the country’s capital.”
While people fret about sales figure and shipping problems, a Museum of Broken Relationships has been founded in Shanghai to remember the true meaning of Singles’ Day.