How a fake Chinese holiday turned into the world's biggest shopping event
China’s biggest shopping day of the year is Friday, and lonely souls are already indulging in a lot of retail therapy. Chinese e-commerce giant Alibaba (BABA) recorded $1 billion in sales in the first five minutes of this Singles’ Day starting at midnight Friday local time, according to Bloomberg News.
Singles’ Day — a twist on Valentine’s Day — is celebrated annually on 11/11 by those embracing the single life in China. What began as an informal holiday created by single male university students in the 1990s celebrating their single lifestyle generated a Guinness World Record breaking $14.3 billion in transactions for Alibaba last year.
As CEO of Alibaba, Jack Ma recognized that China could not reap benefits of Cyber Monday that Amazon could as the nation does not celebrate Thanksgiving and Christmas. In 2009 he convinced a mere 27 merchants to sell their products for up to 50% off on Alibaba, according to Forbes. The $10 million in sales earned that year has skyrocketed as hundreds of merchants now offer 50% discounts for a full 24 hours.
Sales for the holiday exceed those made in the US on Black Friday and Cyber Monday combined, which last year raked in $5.8 billion in total online orders, Adobe reported. Last year, 70% of sales came from mobile phones, and this year consumers will be able to shop for goods using virtual reality technology, Alibaba’s executive vice chairman Joe Tsai announced at a kickoff event.
Singles’ Day has proven a regulator’s nightmare as “fake discounts” have plagued the holiday in years past. Earlier this week the State Administration for Industry and Commerce (SAIC) warned Alibaba and other e-commerce sites that it would not tolerate abuses such as jacking up prices in the weeks leading up to the event. In years past sellers have also been accused of selling fake products. Alibaba said in a May securities filing that the SEC was investigating its operating data from Singles’ day.
Analysts predict the e-commerce giant will record close to $20 billion in sales tomorrow, a nearly a 50% increase year-over-year. This year’s new sellers entering the marketplace include Apple (AAPL), Target (TGT), Guerlain and Maserati. The additional action may help revive Alibaba, whose shares have fallen more than 13% in the past month.
Singles’ Day events this year have also been affected by the impending Donald Trump presidency, which may continue to be a lingering source of discord as Trump has said he would impose tariffs on goods made from China. At a kickoff Single’s Day event, Tsai told reporters that America would “be in trouble” if Chinese consumers can’t purchase US products and Chinese investors can’t invest in the US, The Wall Street Journal reports.
There’s historically been an international presence at Singles’ Day events. American pop singer Katy Perry was scheduled to sing at Alibaba’s Singles’ Day gala but abruptly backed out. She cited undisclosed family matters as the reason for her withdrawal a day after tweeting her devastation at the results of the US presidential election.
Retired NBA star Kobe Bryant and Chinese girl band SNH48 are still set to appear at the event.
Disclosure: Yahoo Finance’s parent company, Yahoo, is invested in Alibaba.
