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Singles’ Day: A record take, but growth rate slows for Alibaba

$30.7bn – a new record one-day take for e-commerce giant Alibaba and its Singles’ Day event on Sunday.

But while the world’s biggest online sales event is still recording double-digit gains for the 24-hour shopping frenzy, this year’s annual growth rate actually dropped to its slowest-ever, from 39% to 27%. That was at the low end of analysts’ estimates, and the smallest rate in the event’s 10-year history.

Is 27% really bad news? No, it’s still huge by anyone’s measure and the bigger any event or company gets, the harder it is to repeat the rocket-fuelled growth rates of earlier times.

Just how big the event is was reflected in the pre-launch televised stage show in Shanghai. This year, it featured US singer Mariah Carey, Australian model Miranda Kerr, a Japanese Beyoncé impersonator and a Cirque du Soleil performance.

Singles’ Day, also called ‘Double 11’, outstrips the sales of US shopping holidays Black Friday and Cyber Monday combined. The CNY213.5bn total surpassed last year’s full-day sales record of CNY168bn in under 16 hours. During this year’s event Albibaba said it worked with 180,000 brands in over 200 countries, and shortly before midnight on Sunday it had sent out over 1bn packages.

Alibaba recorded roughly $10bn in sales in the first hour after midnight as shoppers snapped up hot items including iPhones, furniture and milk powder, starting pre-dawn. Beauty products from Japan’s Kao and Dyson hairdryers booked CNY10m each in sales in the first hour of trading on Sunday, according to Alibaba.

Sales of those international brands echoed research by global consultancy Oliver Wyman, which revealed that around 57% of surveyed consumers intended to buy overseas goods.

While small appliances and beauty were strong on Sunday, sales in big-ticket items including large appliances slowed, tracking a downturn in the housing market, Alibaba vice-chairman Joe Tsai said. “If people aren’t buying new homes, they aren’t buying appliances,” he admitted.

News of the event’s growth slowdown comes as Alibaba is grappling with a slimmer sales outlook amid rising trade tensions the US that have taken a bite out of China’s economy.

Earlier this month it revised down its full-year sales outlook by 4%-6%. To compensate, the company will take in less commission from its platforms in the near term in order to retain brands and attract new buyers, it said.

Online sales growth is also slowing across the board in the country’s eastern mega-cities, including Shanghai and Beijing, and Alibaba said roughly 75% of new users last quarter were in “less developed” areas.

Despite the milder growth, executives were upbeat on Sunday at a press event in Shanghai, attended by roughly 800 journalists who watched a live-streamed ticker of the sales.

“Today we reached CNY200bn. But we have to change. We have to continue to change to reach 300bn or 500bn,” said chief executive Daniel Zhang, who is credited with being the architect of the original Singles’ Day sale.

The event has boomed along with China’s rising middle class, and the day has now become a test for an economy grappling with falling property prices, volatile stock markets and a growing trade war.

Executive vice-chairman Joe Tsai also acknowledged that while a trade war might negatively affect China’s economy in the short term, a wave of increasingly affluent consumers is likely to lift both the country and the company.

“There are 300m [in China’s] middle class. In the next 10, 15 years, that number will double to 600m,” Tsai said. “That number is not going to stop, trade war or no trade war.”

But analysts said the sales continued to be cannibalised by competing events, including the “618” festival spearheaded by Alibaba competitor JD.com Inc in June.

JD.com, which also has a longer Singles’ Day sales event culminating on November 11, said sales in the period had hit CNY159.8bn ($23bn) this year, up about 26% from last year.

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