Alibaba Group Holding Ltd. says sales from its massive Singles Day shopping event totaled $17.8 billion, up more than 24% from the record $14.3 billion sold last year.
(This year’s total is RMB 120.7 billion, up 32% year-over-year due to fluctuations in the Chinese currency.)
The most popular U.S. brands as of about 10:30 p.m. CST were, in order: Apple Inc. Nike Inc. New Balance, Playboy, and Skechers USA Inc.
“Alibaba is using this year’s Singles Day to showcase the number of international brands participating, everyone from Apple, Victoria’s Secret, Burberry, Gap, [and] Nike, acting as the gateway to China for these brands and fulfilling Chinese consumers’ insatiable demand for Western products,” said Danielle Bailey, head of Asia-Pacific research for L2 Inc.
Victoria’s Secret is in the L Brands Inc. portfolio.
Singles Day started strong, with sales of $1 billion recorded in the first five minutes.
Alibaba Offers Virtual-Reality Shopping on Singles’ Day
Alibaba is hoping to boost sales from China’s biggest annual online-shopping event–Singles’ Day–with what it claims is the world’s first virtual-reality shopping experience.
Many U.S. brands have tried and, so far, failed to find success in the Chinese market. Recently, Netflix Inc. said it would abandon efforts to launch a full-service offering in China.
Wal-Mart Stores Inc. announced in June that it would partner with Alibaba rival JD.Com Inc. to grow its China business. The partners announced new initiatives in October.
Apple and Nike are popular in China irrespective of the day, with Nike reporting 21% revenue growth in China in fiscal first-quarter 2017. The U.S. and China are Nike’s two biggest basketball markets, Trevor Edwards, Nike brand president, said on the Sept. 27 earnings call, according to a FactSet transcript.
The Playboy brand is also popular in China, with items like jewelry and fragrances selling well.
Starbucks Corp. seized the opportunity to get into the Singles Day festivities, offering a Cocoa Java Mocha beverage exclusively for the day at locations across China. The company also sold gift sets, exclusively-designed gift cards, and limited-edition My Starbucks Rewards Cards 11/11.
Forty-seven million users purchased international brands, led by U.S. brands, according to L2 data, and 82% of sales were made on a mobile device.
“With Alibaba distributing different deals across different devices, they have encouraged devoted savings seekers to keep separate shopping carts on their desktops and mobile phones,” said Tim Barrett, retail analyst at Euromonitor International. “Alibaba is grooming a generation of mobile-first shoppers, a move which will pay off greatly when the entire world is addicted to their mobile devices.”
For Alibaba Chief Executive Daniel Zhang, this integration of sales across different platforms is critical.
“If you look at this as an online game, people see you will have less margin in the future,” Zhang said, according to the Alibaba live blog of the Singles Day event. “But when we look at the entire landscape, only 10% of China’s total retail is online. What we believe is that at the end of this, online and offline… should be fully integrated.”
This year, Alibaba introduced virtual reality into the 11.11 experience, as well as games, with 2.6 billion games played, according to L2.
“Alibaba is blurring the lines between entertainment and e-commerce and extending technologies thought to be simply gimmicks in the West,” said Bailey.
Even with the eye-popping sales numbers, popular brands and new technologies, Alibaba shares are down 1.4% in Friday trading.
“In keeping with the de-emphasis of GMV [gross merchandise value] as a reported metric, we expect sales volume to become but one of many focuses of the event, with others being new mobile functionality, innovations and improvements in logistics, new partnerships,” said Deutsche Bank in a note published Tuesday, which calls Singles Day “a PR exercise.” Analysts there expected 35% year-over-year growth.
Deutsche Bank rates Alibaba shares buy with a $138 price target.
Alibaba shares are up 14.4% for the year so far while the S&P 500 is up 5.7% for the same period.