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$30.8 billion in 24 hours

The crazy 11.11 Chinese shopping festival

· miscellaneous

{{{Xiaoyi Lv}}}

Alibaba, the Chinese e-commerce giant, announced that Single’s Day sales have hit $30.8 billion. Every year, Alibaba holds the 11.11 online shopping festival for 24 hours on November 11. The 10th year of Double 11 got a strong start at midnight. This year in the first 2 minutes and 5 seconds, consumers had already spent more than 10 billion yuan ($1.44 billion), making this shopping gala the largest ever in terms of scale and reach. During this festival, from` 11-16 November, around 1 billion packages were delivered every day to online shopping destinations and this figure hits the record for the past years. 

TMall Double 11

From October 20 onwards, 500,000 items are available for pre-order on Tmall, the main platform of the festival. Before 11.11, millions of Chinese shoppers were busy filling their shopping carts on all kinds of devices: mobile phones, tablets, laptops and desktops. 180,000 brands from China and around the world participated in this year's event. In Tmall Global, 3,700 categories of imported goods from 75 countries boosted the traffic. Brands like UNIQLO, Mango and Massimo Dutti offered eye-catching discounts and coupons. Business within the Alibaba ecosystem, including Tmall online, Fliggy travel agency, and the delivery company, jointly offered products from clothes and beauty to discounted flight tickets. The participation of the local services was a highlight in this years' shopping festival. Koubei, a delivery and rating service provider, offered 50% discount on catering, hair salons and karaoke with its 150,000 merchants.

The new features for this year's 11.11 include the expansion to overseas users. The recently acquired unit Lazada held its own single-day shopping event in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam for the first time on its platforms LazMall and Lazada marketplace, making 11.11 truly a global event. According to SHINHAN Financial Group, Korean customers increasingly choose to shop overseas during Double 11 than in the Black Friday. The mega-festival also attracted overseas merchants. Germany's second-largest drugstore Rossmann placed Singles' Day advertisement in metro stations of Frankfurt, to support its discount events of the Tmall store in China. Chinese customers could also pay with Alipay (Alibaba payment service provider) to get a discount in Rossmann’s German shops.

The festival started in 11 Nov 2009 with only 27 merchants. The day is written numerically as 1111, which resembles being single and Chinese people use it sentimentality to "celebrate" their single status. It became an online antidote to Valentine's Day. Alibaba turned the Single's Day on the Chinese calendar into the world's largest annual shopping event. Nowadays Nov 11 has already become a once in a year default date for people to buy things with discounts. According to Wang Xiaofeng, senior analyst of Forrester, this event has also become a test for the limits of Alibaba's cloud computing, delivery and payment capabilities, and for new commerce initiatives and emerging technologies. "We expect to see Alibaba expand its business models through e-commerce, in-store new retail, partnerships such as Fliggy and Singapore Airlines, as well as other technologies, like the chatbot being adopted on the Lazada portal, internationally” she added.

During the countdown ceremony on 19th Oct in Beijing. Alibaba CEO Daniel Zhang, the initiator of the festival, described the festival's evolution as the showcase for the evolution of the Alibaba ecosystem over time, and the expansion beyond e-commerce. Initially the festival aimed at satisfying consumers' enthusiasm and providing high-quality products and reliable services. Now it also embraces Alibaba's new retail strategy- the convergence of online and offline beyond e-commerce through technology. "Over the last two years, we have pioneered the concept of New Retail to accelerate the digital transformation of the offline. We are excited by the impressive results achieved to date and will continue to be the driving force innovating for merchants and customers in the coming decades," Zhang said.

There were concerns on the slowdown of China's economy before this years' Double 11. In contrast, the data shows that the middle-class consumers haven't stopped buying. The sales of fast-moving consumer goods such as beauty products has grown considerably and supported the retail market. The rise of the Chinese middle class and their need for an upgrade in lifestyle will likely support the consumption in various sectors.

Why the Chinese like to shop online

According to a McKinsey report, China is the world's largest e-commerce market and its e-commerce transactions have reached more than 40% of global transactions. The Chinese transaction value of mobile payments outpaces the U.S. by a factor of 10. As of June 2018, there were 802 million internet users in China. Thanks to the large Internet user-base, the Chinese digital players are able to make experiments. Moreover, 1/5 of the internet users in China are only using mobile, and 68% of the internet users make mobile payments. The preference of digital tools encourages rapid business innovation among the digital players.

Besides the internet user base, the digital ecosystem built by Baidu, Alibaba and Tencent also plays a vital role. These companies have built multi-industry digital ecosystems that cover almost every aspect of a consumer's life. They have also driven the technology’s performance to a world-class standard and taken out the inefficient and low-quality offline markets. Let's take Alibaba for example. Alibaba's largest online platform, Taobao, operates on PC and mobile for third parties and it does not engage in direct sales or hold inventory. The company’s Tmall on the other side is a premium shopping destination which is mainly occupied by international brands. AliExpress is Alibaba's global e-commerce site enabling international consumers to buy directly from China. Juhuasuan is a group buying marketplace and Xianyu is a second-hand platform. One the B2B side, and distribute wholesale products to domestic and global markets respectively. Alibaba also has its unique payment service system called Buyers and sellers can finish their payment process concern-free. Behind all these platforms, the Alibaba Cloud Computing process huge amount of data for internal and third-party use.

Despite how widely the Alibaba Group touches the country, only 17.5% of the total retail sales of consumer goods is done online, according to National Bureau of Statistics of China, September 2018. Nevertheless, the Alibaba executives are still optimistic about the Double 11's future. "We will, for sure, continue to evolve and continue to be innovative.” said Alibaba Group CEO Daniel Zhang, I think, going forward, people's lifestyles will change with the development of new technologies and business models.”

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