Alibaba Group has almost smashed through their sales record for Single's Day -- and the event is only halfway over

Jack Ma, founder and executive chairman of the Alibaba Group. Photo: Adam Jeffery/CNBC/NBCU Photo Bank

Update: It is now around the half-way mark into the 24-hour Single’s Day shopping 24-hour marathon event, and Alibaba Group Holding Ltd. has almost already hit their sales targets of $11.9 billion worth of transactions.

Last year Alibaba managed to bin $14.3 billion worth of sales during the whole event. It was a 60% leap in transactions from 2014.

Alibaba Group posted $US1 billion ($1.3 billion) of sales within the first five minutes of its Singles’ Day shopathon, a 24-hour event that may offer clues on the health of the Chinese economy and its largest online retailer.

Investors are keeping a close eye on the annual November 11 spending blitz that dwarfs Black Friday and Cyber Monday in the US, to see if Alibaba can reprise the 60 per cent leap in transactions to 91.2 billion yuan it managed last year. The e-commerce giant again turned up the star-wattage for 2016, enlisting Hollywood actress Scarlett Johansson, sports celebrity David Beckham, basketball legend Kobe Bryant and pop-rock band One Republic to headline a pre-sale gala and drum up international attention.

Singles’ Day sales may hit new high

Alibaba Group Holding Ltd. posted $1 billion (6.81 billion yuan) of sales within the first five minutes of its Singles’ Day shopathon, a 24-hour event in China.
Pioneered by Alibaba in 2009 and since replicated by rivals including, Singles’ Day has become somewhat of a barometer of Chinese consumer sentiment. Executives have set the bar high, confidently predicting another record-breaking endeavour at a time when the economy’s growing at its slowest pace in a quarter-century and a weakening yuan may curb enthusiasm for foreign wares.

“Alibaba will likely break another Singles’ Day sales record this year as bargain-seeking Chinese consumers again flex their spending muscle and shrug off any concerns there may be about China’s slowing economy,” said Andria Cheng, an eMarketer analyst. “Many foreign brands, with and without local China presence, will use this shopping event to further raise their brand profile with Chinese consumers.”

Singles’ Day was invented by college students in the 1990s as a counter to Valentine’s Day, according to the Communist Party-owned People’s Daily. Written numerically, November 11 is reminiscent of “bare branches,” a local expression for bachelors and spinsters. It’s since morphed into a consumption phenomenon involving months of planning, millions of logistics and technology personnel, and a nationwide cascade of ads and promotions.

Some 11,000 brands will be hawking their products on the day. Alibaba is touting a virtual reality service to let Chinese buy from Macy’s in New York and Tokyo’s Otaku Mode. It’s added live-streaming to its sites and even a location-based Pokemon Go-like mobile game to try and drum up interest.

“Consumer behaviour is changing,” Alibaba Chief Executive Officer Daniel Zhang said during the gala. “Shopping has become entertainment.”

Alibaba’s US-traded shares fell as much as 4.6 per cent Thursday due to concerns about how Donald Trump’s presidency could affect the company’s overseas expansion.

Beyond China

For the first six years, results were tabulated in Alibaba’s hometown of Hangzhou in eastern China. This year, it relocated its command centre to the southern city of Shenzhen just across the border from Hong Kong, to try and capture international attention. Founder and CEO Jack Ma, who aims to get half the company’s revenue from beyond China by around 2025, has said that he wants to introduce the shopping festival to the US and UK.

Last year, a third of buyers made purchases abroad during the event — Nike sneakers and Levi’s jeans were among the hotter items. Global retail e-commerce is expected to grow by 24 per cent to $1.91 trillion in transactions this year, according to eMarketer. In China alone, that number will increase by 36 per cent to $899 billion, it said.

Alibaba’s event however has drawn controversy around how it accounts for purchases, or gross merchandise volume. The US Securities and Exchange Commission has been looking into data from last year’s promotion, responding in part to concerns that the total may include sales faked by third-party merchants or transactions that haven’t been paid for. Vice Chairman Joseph Tsai has said the company is cooperating with the regulator, sharing facts in an investigation it voluntarily disclosed.

Allegations of numbers-inflation have surfaced locally as well. On Tuesday, the State Administration for Industry and Commerce said it had summoned the largest online retailers — including Alibaba, JD, Tencent Holdings and — to a meeting, warning them against inflating sales, touting fake goods or predatory tactics on the day.

“There’s a lot of fuzziness into that number,” Paul Sweeney, an analyst with Bloomberg Intelligence, told Bloomberg Television. But “most investors look at the gross merchandise value that they report more for the directional tone that they set.”

This article was first seen on Business Day. You can read the original article here.

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