Retail

This Weekend’s $25B Shopping Event

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When Singles Day launched nearly a decade ago, the then-fledgling eCommerce brand Alibaba didn’t really think they were changing the face of commerce in its nation.

By even their own accounts, their aims were much more modest – they were just looking for some kind of marketing event to draw attention to its new online marketplace, Tmall. Mobile was something almost no one in China had ever heard of, and online shopping wasn’t much more than a blip on the radar just yet. It was not an important part of public consciousness.

But the firm had the idea that perhaps some kind of commerce event, like Black Friday or Cyber Monday, was just the thing to jump-start awareness – if it was very specifically geared to Chinese consumers.

Which led them to Singles Day – a “holiday” in China that was more of a joke among college students than anything else when Alibaba’s current CEO Daniel Zhang stumbled on the concept in 2009. Singles Day was an annual celebration on Nov. 11 for those without romantic partners.

It was, Zhang realized, a perfect fit for shopping.

“If people are still single, we can offer them good choices and they can go shopping online. Then they will not feel alone,” Zhang said of the initial idea that launched Singles Day.

And though the first turn-through was small – only 27 brands took part in the original celebration of the event – Alibaba knew they were onto something that was going to get big.

Really big, as it turns out.

So big, in fact, that even its creator says he never anticipated the size and scope Singles Day would eventually build. His main hope was just to introduce a somewhat wider swath of Chinese consumers to the concept of eCommerce.

“I never expected that we could actually transform this day into a commercial day … for the whole society,” Zhang told CNBC. “I think today it’s more like a phenomenon.”

A phenomenon that thus far has gotten bigger every year – but might be heading for some choppier water in 2018.

A Brief History of Singles Day

Singles Day’s first slogan was as follows:

“Even if you don’t have a boyfriend or girlfriend, you can at least shop like crazy.”

(就算没有男女朋友,至少我们可以疯狂购物).

We’re told it is catchier in Chinese.

But, according to reports, by emphasizing that singlehood was a status to be celebrated with a treat instead of something to be ashamed of, Alibaba actually created a kind of party feeling around a holiday that only a handful of Chinese consumers were even aware of a decade ago.

Layered on top of the celebratory atmosphere were 50 percent discounts among the handful of participating merchants, who at first had to be cajoled into the event. But those that stayed on board (many dropped out at the last minute, according to Alibaba), were ultimately glad they did, as some noted that they generated as much as three months’ worth of sales in a single day.

A star was born.

By 2010, Singles Day had grown to be a $135 million annual event, which had some pretty significant logistical problems in keeping up with its demand. Some customers complained of waiting for weeks and even months for goods ordered during the holiday – and there was some speculation that the event would collapse under its own weight.

But, after a lot of infrastructure building and rebuilding, particularly around logistics and payments, Singles Day was back on track – and by 2012, it was officially bigger than Cyber Monday in terms of revenue. By 2014, it was bigger than both Cyber Monday and Black Friday.

It was also, at that point, increasingly becoming a mobile-based shopping event, fueling the coming surge of Alipay.

By 2015, Singles Day was bigger than Black Friday and Cyber Monday combined – and the celebration had gone from online to on television, via national broadcast and globally live stream.

Those events have, in recent years, become increasingly elaborate in terms of spectacle: Daniel Craig, Kobe Bryant, David and Victoria Beckham, Pharrell Williams and Nicole Kidman are a very short list of the host of celebrities that have been drawn out for the event. Those live broadcasts have also featured contests giving away luxury cars and live fashion shows that allowed viewers to purchase looks strolling live down the runway on Tmall in real time.

But for all that has changed about Singles Day (which has officially been known as 11.11 in Alibaba’s marketing for the event for the past five years), one thing remains consistent: It’s always growing, revenue-wise.

As of 2017, Singles Day had captured $25.3 billion, with 90 percent of its sales coming in on mobile.

But as the festivities are set to get underway over the next few hours, this 11.11 celebration is happening against a backdrop that makes another year of revenue growth far from a safe bet for Alibaba this time around.

The Challenges of 2018

According to most market watchers, Alibaba has three big issues going into Singles Day 2018: the fact that the holiday is now a universal retail event nationwide, the fact that there are concerns about the Chinese economy cooling off and the possibility of a trade war with the United States.

The competition, most note, is likely a sunk cost – and something that Alibaba has successfully dealt with for at least the last five years.

The cooling economy within China is also an area of concern. Alibaba President Michael Evans told Bloomberg earlier this week that there was “some uncertainty about what will happen,” noting that demand for big-ticket items like washing machines, televisions and automobiles has been softer in recent months. However, he added that cosmetics, food, fashion and apparel continue to see strong growth, and that the platform anticipates its revenue climbing on the billion or so customers it expects to see on its platforms during Singles Day.

As for the trade war, it is safe to say that the looming possibility of trade disruption has failed to delight Alibaba. Outgoing Founder and Chairman Jack Ma recently called it “the most stupid thing in this world.” Evans, on the other hand, noted that from a Singles Day perspective, they are not overly concerned.

“11/11 is not an event that relies exclusively on any one market,” he told Bloomberg TV in an interview on Friday. “We will be working with over 200 countries and regions as part of this enormous event, and so we don’t expect any one area to have a huge amount of influence, other than China, of course.”

Chinese consumers – and consumers in a growing number in places like Russia and the Philippines – are, by local news accounts, ready and raring to go for the holiday, and have been exchanging shopping strategies for the last several weeks.

Moreover, this year, according to Alibaba, Singles Day is about far more than online sales – it is, by their own accounts, all about showcasing the entire ecosystem. That means this year, the holiday’s savings, offerings and deals will extend into Alibaba’s newly opened physical retail stores and their newly acquired food delivery startup Ele.me, through a series of augmented reality (AR) gaming experiences meant to draw consumers (mobile in hand) through a series of physical environments with 11.11 connected retail offerings – and even at its newly launched grocery and convenience stores.

“Singles Day has now become a stage for Alibaba to showcase its capabilities across all its platforms,” CEO Zhang noted at a news conference in advance of the event.

And it looks like Alibaba is fully prepared to show off this year, and is expecting it to be a big day.

Staff are reportedly handing out more than 20,000 quilts for workers who will be staying at their desks this weekend to keep up with demand as the orders start rolling in across channels.

We’ll let you know on Monday how it all turned out.

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