Since that first occurrence, Singles Day has ballooned into a shopping frenzy observed not just by Alibaba, but also by other e-commerce companies that offer their own steep discounts and promotions. Deals take place over several days or even weeks. It has also spread outside of China, with Alibaba’s Southeast Asia subsidiary Lazada offering deals in Singapore, Malaysia, Indonesia, Thailand and Vietnam.
An inflation headache
Alibaba and JD.com still reached new sales records this year though. Alibaba said Thursday that total gross merchandise volume (GMV) hit 540.3 billion yuan ($84.5 billion) through the first 11 days of November. That’s an increase of 8.5% from a year ago.
But that rate of growth was a lot slower than in years past. Last year, Alibaba posted a 26% jump by that metric compared to a year earlier.
Analysts at Citi also recently forecast Alibaba’s total GMV could be as much as 578 billion yuan ($90 billion) through the first 11 days of November, a 15% increase compared to last year.
JD.com posted record sales too, with GMV hitting 349.1 billion yuan ($54.6 billion.) That was up 28.6% from a year ago, slower than the 33% growth rate last year.
While the Citi analysts wrote in a recent report that promotional campaigns have “kicked off with strong consumer demand,” they added that they are “cautious” that overall sentiment could be hurt by a “weaken[ing] underlying economy.”
The cost of goods leaving China’s factories surged by another record rate last month — China’s Producer Price Index jumped 13.5% in October from a year ago — and there are now signs that the higher costs are trickling down. China’s Consumer Price Index rose 1.5% in October from a year ago, double the rate of the previous month and the fastest pace of increase since September 2020.
“On the one hand, the soaring input costs have significantly squeezed the profit margin for downstream manufacturers, which in turn limits the space to offer a large discount this year,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis, a French investment bank. “On the other, domestic consumption is not yet back to pre-pandemic level[s] and even online retail sales, which remained relatively resilient in 2020, have decelerated.”
This year’s shopping event is also being held under the shadow of a sweeping government crackdown over private business.
E-commerce firms have not escaped that scrutiny, and in many ways have been at the center of it. Alibaba was hit earlier this year with a record $2.8 billion fine for behaving like a monopoly, and the company has shed hundreds of billions of dollars in market value as Beijing’s reforms take shape.
JD.com, Tencent, Pinduoduo, Meituan and other companies have also been investigated or fined over alleged anti-competitive behavior.
“The big internet platforms appear to be more cautious in marketing and promotions this year to refrain from breaching the antitrust regulations,” said García Herrero from Natixis.
Alibaba said they would shift focus from pure sales figures — usually each year’s headline — to sustainability and inclusiveness.
“This year’s Festival marks a new chapter for 11.11,” said Chris Tung, chief marketing officer of Alibaba Group, in a statement. “We believe we must leverage the power of 11.11 to encourage sustainable development and promote inclusiveness to consumers, merchants, and partners across our ecosystem.”
The company said it will showcase energy-efficient products on its services and give out 100 million yuan ($15.6 million) worth of “green” vouchers meant to encourage people to buy more sustainable products. It also wants to reduce the event’s carbon footprint by recycling the packaging it uses.
The company also said it wants to support “vulnerable populations,” and its Taobao app has introduced a “senior mode” option. The new feature is designed to be more accessible for the elderly with an updated interface and voice-assisted technology.
JD.com also announced this year’s Singles Day will be “the largest one where renewable energy is used, and one where [JD.com] will push for a reduced carbon footprint.”
Singles Day strikes a cautious tone as China’s economy slows and a tech crackdown continues