"Singles' Day" a festival by Alibaba Group Holding Ltd (BABA.N) hit a new record yesterday reaching $5 billion in transactions in less than 15 minutes. In 2016 sales had reached $5 billion in an hour (with a total of 120.7 billion yuan - $17.73 billion - worth of sales in one day). In the first 30 seconds, 97% of sales were generated through mobile devices and the peak number of transactions per second so far this year reached 325,000. The day closed with sales reaching $25.3 billion, an increase of 39% compared to Singles' Day 2016.
Held every year on 11 November (that's where the name comes from), Singles' Day, 11.11 or Guanggun Jie was first celebrated in the 1990s by young, single Chinese students as an anti-Valentine's Day and an excuse to buy themselves presents.
In 2009, Alibaba started using the date to offer 50% discounts at retailers on its e-commerce platform Taobao, creating this partnered offer with only 27 merchants. In the last few years, Singles' Day transformed into a mighty shopathon, China's own celebration of consumerism with more power to shift goods than the Black Friday and Cyber Monday sales days in the United States combined.
As the years passed, the event turned into a fun opportunity for consumers encouraged by cut-price deals, and into a money-making extravaganza for merchants, fashion labels and celebrities. Alibaba's pre-Singles' Day "See Now Buy Now" show (recorded in October) for its Tmall interactive platform showcased over 50 designer brands (among them Guerlain, Ray-Ban, Nike, Lululemon, Pandora, Adidas, Gap, Mac Cosmetics, Rimowa, Ralph Lauren, Estée Lauder, Furla and Victoria's Secret) all available for purchase online, on the spot.
Viewers across China could watch the show on the Taobao and Tmall shopping apps, but also on Alibaba's own video platform, Youku, on terrestrial Beijing TV, on smart TV platform CIBN, social media platform Weibo and news aggregator Toutiao. Consumers could purchase the items they saw on the catwalk in real-time, via apps and links. The orders placed during this event were counted as pre-sales for 11.11, and transactions were completed by shoppers on Singles' Day.
This event included Chinese musicians and film stars, such as Zhang Yixing and Fan Bingbing, while the countdown gala in Shanghai on Friday evening featured co-founder and chairman Jack Ma and celebrities like Nicole Kidman, Pharrell Williams, Karen Mok and Maria Sharapova.
As a whole over 140,000 brands - 60,000 of them international brands in 235 countries including Japan and the USA - took part in the event, offering 15 million product listings. Among the most successful ones there were Nike Inc., Xiaomi Corp. and Uniqlo Co, but Alibaba's recent partnership with New York Fashion Week also allowed a number of US designers to introduce their goods on its platforms, among the others Opening Ceremony, Robert Geller and Jason Wu.
Other e-commerce retailers have been betting on fashion or on special events: Amazon has increased its fashion offer, while its latest Prime Day generated around $1 billion in revenue during its 30-hour sale window, yet its sale figures are still in a galaxy far away from Alibaba if you think that in 2016 Amazon brought in $3.34 billion on Black Friday.
So, how did Alibaba do it? Well, first the company stuck to its main aim and objective - turning shopping into an entertaining sport discipline, a shopathon that pushes middle-class consumers in China to spend and receive the goods they ordered as soon as possible (the first purchase during Singles' Day this year was delivered less than 13 minutes after midnight). Alibaba managed to radically transform this event by combining retail, entertainment and social media: the mobile viewers of its "See Now Buy Now" show could for example shake their phones when they saw something they wanted and receive links to the product page for purchase, but there were also interactive and augmented-reality games to earn special promotion coupons and prizes every time consumers caught the "Tmall mascot" via Alibaba's Taobao and Tmall apps.
Technology was another key aspect in the transformation: Alibaba tackled a series of issues and added various services for the consumers and, before the event took place, it helped 600,000 convenient stores and 1,000 brands to upgrade their computer systems becoming delivery and storage centers.
The company connected the convenience stores participating to the event to the Internet with the Ling Shou Tong ("connect retail") app and also converted 100,000 retail outlets into smart stores capable of processing payment using facial recognition and other advanced technologies and allowing consumers to track goods availability or having the goods directly delivered to their homes.
Given the massive amount of Internet traffic and goods, Alibaba also set up a strong infrastructure, implemented with Alipay (China's PayPal equivalent) and Cainao (a logistics information platform).
Yet, there are some cons behind this success story: 11.11 revolves around binge shopping and, just like Black Friday or Cyber Monday, it hasn't got any culural value attached to it, so it may die in a few years' time. Besides, people buy fast as they fill their online shopping carts in the weeks leading up to the sale, then click "Buy" right at midnight to get offers and discounts, but, quite often, they return the goods. It is said that 30% of purchases are returned, thanks to Alibaba's seven-day "no questions asked" policy.
While the sales figures may be inflated, they also do not represent revenue for Alibaba as the company doesn't take a cut of sales from its merchants but makes profit on a small commission and fees from advertising.
Last but not least, given the fast rhythms of the operations, the workers behind them get highly stressed and exploited, while the shipping materials employed (think about bubble-wrap plastic and boxes...) may turn Singles' Day into an ecological bomb.
That said, the shopping frenzy that came from China shouldn't be underestimated: there may be some industry players refusing to join the 11.11 trend, including Shangpin, Net-A-Porter China and Yoox China, but you wonder how long they will resist considering that Alibaba Chief Executive Officer Daniel Zhang said the company wants to make the event more global, and is planning to take its gala overseas soon. For this year a mix of "retail-tainment", tech improvements and smart stores was the recipe that granted Alibaba a commercial victory, but the battle for global e-commerce dominance remains open.