Chinese e-commerce honcho Alibaba Group Holding Ltd cashed a record of 213.5 billion yuan ($30.70 billion) in sales on Sunday during its 24-hour online vend frenzy Singles’ Day, however, the annual growth rate plunged to its slowest-ever.
Singles’ Day aka “Double 11” is the world’s biggest online sales event, crushing the combined sales of U.S. shopping holidays Cyber Monday and Black Friday.
Originally, this Chinese event was an innovative student holiday to cherish their singledom, countering Valentine’s Day, but has bloomed into a month-long online shopping festivity that reaches its zenith on November 11 with a 24-hour sale.
This year, the company exceeded last year’s full-day sales record of 168 billion yuan under just 16 hours.
Contrastingly, the annual sales growth rate nosedived from 39% to 27% — the smallest rate in the event’s 10-year history—the low end of analyst estimates.
It seems that the company is dealing with declining sales outlook amidst escalating trade tensions that U.S. have taken a big chunk out of the Chinese economy.
Earlier this month, the trade bite sent further chills through the company’s stock price by revising its outlook by 4-6%.
To compensate this plunge, the company has decided to lessen the commission that it takes from its platforms in the upcoming terms so as to attract new buyers and retain brands.
With slowing online growth across the board in the country’s eastern mega-cities, including Shanghai and Beijing. Roughly 75% of Alibaba’s new users belong from “less developed” areas.
Sales in big-ticket items like large appliances slackened with a downturn in the housing market, whereas cosmetics and small appliances were strong on Sunday, said Alibaba vice chairman Joe Tsai.
He said, “If people aren’t buying new homes, they aren’t buying appliances.”
BIGGER AND BIGGER
Regardless of the milder growth, executives were buoyant on Sunday at a press event in Shanghai grace with the presence of roughly 800 journalists who witnessed a live-stream ticker of sales.
Chief executive Daniel Zhang, the architect of the original Singles’ Day sales stated, “Today we reached 200 billion (yuan). But we have to change. We have to continue to change to reach 300 billion or 500 billion.”
Alibaba’s 2018 sales were kicked with a gala event that saw U.S. singer Mariah Carey, a Cirque du Soleil performance, and a Japanese Beyoncé impersonator.
Speculations are made that with founder and chairman Jack Ma at the helm, the November’s sale was the company’s final sale with Jack Ma. As the company stated in September, Zhang will take over as chairman next year.
During the company’s recent event it said it worked with 180,000 brands across over 200 countries and a few moments before midnight on Sunday it sent over a billion packages.
An excessively large number of sales were recorded in the first minutes of the 24-hour spending frenzy, when transactions occur for items that have been put on hold.
Within the first one minute and twenty-five seconds after midnight, the company settled around $1 billion.
Pedro Yip, partner at consulting firm Oliver Wyman said, “With an increasing number of promotion events a year, consumers no longer feel that Double 11 is the only opportunity to get good bargains.”
He further added, “Having said that, there are more consumers who still enjoy shopping at double 11 than those that don’t.”