Alibaba aims for ‘Singles’ day’ record

Every year as November approaches, ecommerce companies in China hire more temporary staff to process orders and build up inventories. Logistics firms rent more warehouse space and shoppers make lists.

The fabled date of November 11 – known as “Singles’ day” because the date can be represented by four ones, auspicious to numerology-conscious Chinese – is an orgy of online shopping. Sellers heavily discount merchandise, sometimes up to 70 per cent, to attract customers.

Last year, it was 2.5 times bigger than Cyber Monday in the US, the day after Thanksgiving, when online Christmas shopping begins in earnest.

According to the lore, the custom of Singles’ day began in 1993 when students at Nanjing University chose the portentous date as an answer to Valentine’s Day, and unattached singles could buy things for themselves. The day was adopted by ecommerce company Alibaba in 2009 to generate sales – last year the company says it processed 254m orders worth $5.8bn on the day.

Since then, Singles’ day has caught on with Chinese ecommerce companies like wildfire. “Alibaba started Singles day as an ecommerce phenomenon, but it doesn’t own it,” says David Zhao, chief executive of Shangpin, a fashion shopping ecommerce site devoted to expensive, branded clothing. “Now everyone does it.”

He adds that he has to increase inventory sixfold to meet the seasonal demand.

However, Alibaba might dispute the assertion that it does not own singles day. Research by Reuters news agency found Alibaba has registered six trademarks relating to the double-11 motif of Singles day shopping. In October, Alibaba’s online marketplace Tmall warned Chinese publishers against running ads with the Single’s day motif that are not official Alibaba promotions, saying in a letter that it is a registered trademark.

Their competitors disagree, however. “The holiday was started by students in 1993, so it would be like trying to trademark ‘Thanksgiving’ and threatening to sue anyone who uses it,” says Josh Gartner, spokesman for Alibaba’s rival JD.com, the largest single-largest online retailer in China, and the second-largest marketplace after Alibaba.

JD.com recently opened a 100,000 square meter state-of-the-art warehouse in Shanghai to help manage the crushing sales volume during the Singles’ day sale. The company says it has an additional six large warehouses in the planning or construction stage across China in an effort to expand its same-day and next-day delivery capacity.

To help manage the crunch during singles day, JD.com has decided to spread its discounts over 12 days, from November 1-12, “so the logistics network doesn’t get clogged up,” says Mr Gartner. “Who wants to save money on a phone if it won’t arrive for three weeks?”

For Alibaba, though, Singles’ day itself is sacrosanct. The company regularly tries to hit a massive single day of gross merchandise value that will generate huge headlines, such as last year’s $5.8bn in sales, even if that creates a problem for logistics companies. Compared with a daily average of 16.6m packages sent via Alibaba’s logistics providers, last year saw an increase to 156m.

To help manage the flow, however, sellers have put some popular items on “presale” starting in mid-October. Buyers can place a deposit on the product and pay the remainder on Singles’ day.

Alibaba says that the flexibility of its company and the reliance of its sellers on numerous logistics networks means it has an inherent scalability that others do not have, with no trouble meeting the demand.

Additionally, this year Alibaba aims to make Singles’ day a global event. Wang Yulei, president of Alibaba’s business-to-customer site Tmall, has said Alibaba has set up servers and warehouses overseas, and strengthened co-operation with international logistics firms, to help process the huge number of orders expected from overseas buyers.

He added that 200 merchants in 20 countries have confirmed their participation in the event. Jack Ma, Alibaba’s founder and largest shareholder, said he has a target for Rmb100bn (more than $16.3bn) for Singles’ day.

Allen Xu, managing director of consulting firm OgilvyOne in Shanghai, says: “A big part of Alibaba’s strategy this year will be global integration – teaming up with more global brands to participate in this shopping phenomenon and introduce Chinese consumers to more international products.”