Chinese e-commerce leader Alibaba (NYSE:BABA) just completed its ninth annual Singles Day sales event and smashed all previous records by selling $30.8 billion worth of goods.
To put that in perspective, the five-day kickoff to the Christmas shopping season that begins on Thursday, Thanksgiving Day, and runs through the following Monday, known as Cyber Monday, generated sales of $19.6 billion. And that's for all of retail. Alibaba's sales figure don't include the sales generated by other Chinese retailers, such as its biggest rival, JD.com (NASDAQ:JD), which sold $23 billion worth of merchandise (albeit over an 11-day period, though the bulk came on Singles Day itself).
Put another way, it took Amazon.com (NASDAQ:AMZN) three months to sell $33.7 billion worth of goods in the third quarter, which also included its best-ever Prime Day event that sold an estimated $3.4 billion -- and that was over 36 hours. Alibaba generated over $1 billion in gross merchandise value (GMV) in the first minute and a half and surpassed last year's $25 billion total in just under 15 hours.
A sales tsunami
It's clear Alibaba's Singles Day is a monumental event. Begun as a way for Chinese college students to celebrate being single, the day falls on Nov. 11, or 11-11, which in Chinese culture represents "bare branches," or a way of saying someone is single. It has since become a cultural phenomenon.
Alibaba began using the event in 2009 to boost sales and generated about $7.5 million in GMV that first year. It has since grown every year thereafter, but the rate of growth is slowing. The nearly $31 billion in sales it generated is 21.7% more than it did in 2017, but is down from the 42% gain made last year. Three years ago, Alibaba's sales were more than double the current rate.
Of course, you can't expect sales to continue growing at such a torrid pace, not when you're discussing sales in the tens of billions. Yet it also mimics the slowdown Alibaba is experiencing overall as it recently revised lower its full-year sales growth guidance to just 4% to 6%. Alibaba shares are down 27% over the last six months, which itself reflects general worries about a slowing Chinese economy and a trade rift with the U.S.
China's economy grew 6.5% in the third quarter, missing analyst expectations and coming in lower than a year ago. Retail sale for the period, however, grew 9.2%, beating forecasts of a 9%. Even so, experts remain skeptical of any official government data.
Make it global
Singles Day is still a huge success for Alibaba, which created something out of nothing, but as the phenomenon grows, U.S. retailers may want to latch on to it. There are several reasons to recommend the strategy.
A number of U.S. retailers already partner with Alibaba and its Tmall subsidiary to offer sales during the event, though they don't make them available to U.S. customers. Doing so ought to be a simple process.
Also, because the event takes place in November, it could help retailers boost sales for Christmas soon. Holiday creep is already in full swing, so starting two weeks before Thanksgiving is almost right in stride for many retailers.
Retailers have begun riding the coattails of Amazon's Prime Day, offering their owns sales events and specials, and as more people here become aware of Singles Day, extending their sales to coincide with it could kick off Christmas early for them.
Alike but different
As amazing as Alibaba's numbers are, there are a few caveats. Retailers participating in Singles Day actually rack up sales in the days leading up to the event, but only process the orders on Nov. 11, making it more than just a one-day phenomenon. If Amazon.com promoted its Prime Day for days or weeks ahead of time, generating orders for it but not processing them until the day of the sale, its sales figures would be higher as well.
Also, Alibaba is more like eBay than Amazon, hosting third-party retailers rather than selling goods itself, so Singles Day and Prime Day are not quite analogous, though Amazon does also host third-party retailers and their own sales exceeded $1 billion.
Moving $30 billion worth of goods in such a short span of time is no small feat, but it may soon reach a saturation point for growth.