Alibaba had a huge day on Wednesday. The company’s 11/11 Singles’ Day sales eclipsed analyst expectations with over $US14 billion processed on the company’s platforms in just 24 hours.
While this number is massive, and may or may not help quiet critics, the way the company made the boatloads of money offers a glimpse into the future of Alibaba.
Singles’ Day was an international success
Alibaba’s big push for Singles’ Day this year was to grow the sale into a global event. The company teamed up with 20,000 non-Chinese retailers to sell products on its Tmall and Taobao platforms. They even had a televised party featuring celebrities such as Daniel Craig and a video of Kevin Spacey in character as Frank Underwood from House of Cards.
It was a phenomenal success.
“CEO Daniel Zhang noted that cross-border gross merchandise volume (GMV) generated in the first two minutes this year exceed the total cross-border GMV generated during the entire 24 hour period last year, a positive indicator of international traction,” wrote Stifel analyst Scott Devitt in a note to clients Wednesday.
Daniel Wei, at Credit Suisse, wrote in a note that the top five non-Chinese countries with packages coming from Alibaba were the US, Singapore, Malaysia, Australia, and Canada.
According to a note from Suntrust’s Robert Peck, one-third of Alibaba buyers made a purchase from an international company. This fulfilled the goals of the company had set before the big day.
“The real importance is this is the first time they have had a lot of international brands on the platforms,” Peck told Business Insider on Tuesday. “This is their chance to introduce Chinese consumers to these international brands.”
Peck said the day would kick off a push for Alibaba into other markets outside of its Chinese base.
The future is global
Alibaba’s stock actually dropped in the US on Wednesday and opened down again on Thursday, which may or may not have to do with Singles’ Day. While investors didn’t respond immediately to Alibaba’s big numbers, the globalization efforts showed a way forward for the company.
On Wednesday, the founder of Alibaba, Jack Ma, told Bloomberg’s Emily Chang in an interview that the company is pushing to make over 50% of its revenue outside of China.
This seems to be a theme for Alibaba and Ma.
He previously acknowledged that the Chinese economy is slowing and that the company’s explosive gains in revenue and user additions in China have slowed.
There is still money to be made in the market — only 50% of Chinese citizens have internet — but the level of growth investors have come to expect may not be there, so broadening the scope may be wise.
The attack for Alibaba is twofold: Bring in non-Chinese brands to the Chinese market, and expand its offerings to consumers outside of its home country’s borders.
The Singles’ Day hoopla is just another aspect of both of those pushes. As reported by Business Insider UK’s Oscar Williams-Grut, the company signed an agreement for a new office in London on Thursday, and the company now has offices in India, the US, and the UK.
Additionally, Alibaba has formalized relationships with international retailers such as Macy’s, helping to globalize its product base.
“We view the international initiatives as key long-term growth drivers as the company begins to expand its presence in the U.S. and Europe over the next few months,” wrote Devitt at Stifel. “We believe the strong Singles’ Day performance is a positive step towards Alibaba’s evolution into a global digital content and ecommerce ecosystem.”
By extending its arm outward beyond China, Alibaba is trying to establish itself as not just a Chinese ecommerce company but a global ecommerce company based in China.