Alibaba raked in $38 billion of sales during its 2019 Singles Day shopping festival. |
Early sales figures for Alibaba Group Holding Ltd.'s modified Singles Day event on Nov. 11 show that the Chinese e-commerce company is on track for another impressive edition of what is the world's largest shopping festival.
This year, Alibaba is holding its flagship festival, also known as 11.11 or Double 11, in two phases in order to ease logistics pressure and allow more time for consumers to shop in the aftermath of COVID-19. The first window took place between Nov. 1-3 while the main day is scheduled as usual for Nov. 11.
From Nov. 1 to the first 30 minutes of the Nov. 11 segment this year, some 372.3 billion yuan, or about $56 billion, had been spent across Alibaba's platforms. The Hangzhou-based company raked in $38 billion in total sales on Nov. 11, 2019.
Alibaba's logistics arm Cainiao is deploying over 3,000 chartered flights and cargo ships to deliver goods to China, while pop stars Taylor Swift and Katy Perry are performing at the Singles Day gala event, albeit in an online capacity.
The two checkout periods of the event this year has led to a new approach for calculating and reporting of the GMV in 2020, said Michael Norris, research and strategy manager at AgencyChina, who is on the ground at the Alibaba live event. The post-COVID-19 Singles Day also requires a different approach to spurring consumption, he said.
"That means we'll have to live with less frequent GMV updates, and need to look at Singles Day consumption through different lenses. This year, I think Alibaba is trying to showcase a more 'holistic' picture of the event's impact on consumer spending and brands worldwide," said Norris.
Alibaba's NYSE-listed stock was 6.8% lower at $270.80 in early afternoon trading.
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The impressive early figures will go some way to dispelling concerns voiced by some that consumer demand may not be as bullish as usual in the wake of the COVID-19 pandemic. Even online, nearly 14% of respondents to an Oliver Wyman survey felt that the pandemic has left too much uncertainty for them to take advantage of the deals, said Jacques Penhirin, partner at the consultancy's Greater China office.
Cosmetic and skin care products, which accounted for 21% of the brands that raked in over 100 million yuan of sales during the 2019 event,
Only 39% of respondents surveyed in 2020 said they would purchase imported cosmetics and skin care products, compared to 60% of respondents in 2019, according to an Oliver Wyman poll. The share prices of Chinese cosmetics companies Yujiahui Co. Ltd. and Proya Cosmetics Co. Ltd. have doubled since the beginning of the year, reflecting the surging interest in local beauty brands.
Yatsen Holding Ltd., the maker of budget skin care brand Perfect Diary, has filed for a U.S. listing in November. The homegrown label popular among young Chinese women was the top-selling brand in the color cosmetics category on Tmall during the 618 online shopping festival in June. Its revenue grew 73.2% year over year to 3.27 billion yuan in the first nine months of 2020, according to the company's prospectus.
Categories like healthcare and baby care products are also seeing a shift toward local brands. A few local producers grew in prominence in the ultrapremium price points for baby care products as the COVID-19 outbreak disrupted supply from Europe and Australia, Penhirin said. Australian infant formula brands including Bubs Australia Ltd. and Nuchev Ltd. previously said their sales had been hit by a slowdown in the daigou, or personal shopper, channel.
A significant number of respondents cited patriotism, speedier delivery and better value in light of economic uncertainty as reasons for their shift to local brands, according to surveys by AlixPartners and Bain.
Recovery beckons
Findings from the surveys also point to a continued revival in consumer spending. Retail sales have returned to growth since August, rising 3.3% in September, as China's economy showed resilience in the third quarter. Close to 40% of respondents surveyed by Bain said they would increase their spending during Singles Day.
Chinese consumers remain most interested in buying clothes, bags and shoes during the festival, according to the Oliver Wyman and AlixPartners surveys, despite a continued decline in this category in major global markets. Alibaba executives said during a Nov. 5 earnings call that growth of apparel sales on the Tmall platform had outpaced pre-pandemic levels during the latest quarter.
In the opening 111 minutes on Nov. 1, apparel companies including Nike Inc. and Adidas AG, as well as beauty brands such as Perfect Diary, L'Oréal SA's Lancome and The Estée Lauder Cos. Inc. were among the 100 labels that reached over 100 million yuan in gross merchandise sales on Alibaba's platforms.
In line with recent trends, demand for household care products surged on the opening day of the event, displacing lifestyle electronics as the fourth most popular category. Fashion and accessories, shoes and beauty products remained the top three categories.
"Most of China has returned to normal, albeit with some precautions," said Jason Ong, director at AlixPartners. "We believe that shopping behaviors are generally back to the pre-COVID situation, but the awareness and concern for the potential spike [in cases] is increasing consumer purchases of certain categories like home care."
As of Nov. 9, US$1 was equivalent to 6.62 Chinese yuan.