Alibaba’s 2017 11.11 saw a 39% sales increase

The origins

Alibaba’s 11.11 Global Shopping Festival, renamed from Singles Day in 2015, is an annual promotional event on Tmall to reward consumers through discounts. It is the biggest 24-hour online sale event both in China and globally.

Alibaba’s 11.11 Global Shopping Festival sales have grown from $17.8bn in 2016 to $25.4bn in 2017, and the holiday’s success and cross-border expansion has gained the interest of Alibaba’s local and international rivals. Chinese-based JD.com and Suning - as well as the international drop shipper Gearbest - offered special promotions on the same day. While Alibaba is attempting to make the Festival truly global through AliExpress, there has also been increased competition from international competitors attempting to replicate the strategy.

2017 results

Alibaba’s 2017 11.11 shopping event saw another record in sales, with over $25bn revenue generated in one day. When taking currency fluctuations into account, 11.11 revenue increased 39% compared to 2016, when the event’s sales totalled $17.8bn. To put these numbers into perspective, Amazon Prime day from July 2017 saw $2.9bn in revenue, which is only 11% of the sales of 11.11.

Top 5 Countries/Regions Buying Cross-Border from China by GMV

1. Russia

2. Hong Kong

3. United States

4. Taiwan

5. Australia

Logistics network innovation

In terms of logistics, Alibaba works closely with its logistics partners at Cainiao to ensure that the entire supply chain ran smoothly for the event. The Cainiao network processed 812m delivery orders on Alibaba’s China retail marketplaces, and AliExpress and Alibaba Cloud processed 325,000 orders per second at peak.

Furthermore, this year Alibaba enlisted 10% of China’s convenience stores, about 600,000 outlets, to offer select goods from Alibaba’s platforms. This gives Alibaba the opportunity to use the store-fronts as fulfillment and delivery centers.

 

 

Staying a step ahead of Amazon

Being ahead of Amazon in the e-commerce world is not easy, but Alibaba proved that to be possible in at least two areas.

  1. First, the online shopping festival. Alibaba saw the opportunity to create new reasons to buy online way ahead of Amazon – it got involved in the 11.11 Singles’ Day in 2011, while Amazon only launched its Prime Day shopping event in 2015.
  2. Alibaba invested heavily in buying into grocers, shopping malls and even department stores years before Amazon announced its $13.7 billion acquisition of Whole Foods in 2017.
  3. The Chinese e-retail giant is also converting 100,000 retail outlets into so-called ‘smart stores’ in a program that has drawn 1,000 labels, from Levis to L’Oreal. If one outlet runs short on certain inventory, customers can track availability at other locations. As well as in-store pick-up, they can also get goods delivered to their home.

What does this mean for the post?

11.11 is a huge sales day which leads to a large volume of parcels to be delivered. This translates to the logistics partner deals that Alibaba’s logistics arm, Cainiao has to set up with posts and other delivery operators way in advance. This short boost in parcel volumes is an operational challenge for parcel operators and is something that will likely increase over the coming years.

Source: AlizilaBloomberg