The Chinese e-commerce giant’s Singles’ Day, also called ‘Double 11’, is the world’s biggest online sales event

Chinese e-commerce giant Alibaba cashed a record 213.5-billion yuan ($30.7bn) in sales on Sunday during its 24-hour online retail frenzy Singles’ Day, but the event’s annual growth dropped to its slowest rate.

Shoppers in China and across the world snapped up hot items including iPhones, furniture and milk powder starting predawn, with Alibaba recording about $10bn in sales in the first hour after midnight.

Singles’ Day, also called “Double 11”, is the world’s biggest online sales event, outstripping the sales of US shopping holidays Black Friday and Cyber Monday combined.

The Chinese event was originally a novelty student holiday to celebrate being single, countering Valentine’s Day, but has since grown into a month-long online shopping festival that peaks with a 24-hour sale on November 11.

In 2018 the company surpassed 2017’s full-day sales record of 168-billion yuan in just under 16 hours.

Despite the record haul, the annual sales growth rate fell from 39% to 27%, at the low end of analyst estimates, and the slowest rate in the event’s 10-year history.

It comes as the company is grappling with a weaker sales outlook amid rising trade tensions between China and the US that have taken a bite out of China’s economy.

Earlier in November it revised down its full-year sales outlook by 4%-6%, sending further chills through the company’s stock price, which has dropped about 16% in 2018 after almost doubling in 2017.

To compensate, the company will take in less commission from its platforms in the near term 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 about 75%  of new users last quarter were in “less developed” areas.

While small appliances and cosmetics were strong on Sunday, sales in big-ticket items including large appliances slowed alongside a downturn in the housing market, Alibaba vice-chair Joe Tsai told journalists.

“If people aren’t buying new homes, they aren’t buying appliances,” he said.

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

“Today we reached 200-billion [yuan]. But we have to change. We have to continue to change to reach 300-billion or 500-billion,” said CE Daniel Zhang, who is credited with being the architect of the original Singles’ Day sale.

Alibaba launched 2018’s sales with a gala event that featured US singer Mariah Carey, a Japanese Beyonce impersonator and a Cirque du Soleil performance.

It is expected to be the company’s final November sale with founder and chair Jack Ma at the helm, with Zhang set to take over as chair in 2019, the company said in September.

During the 2018 event the company said it worked with 180,000 brands across more than 200 countries, and shortly before midnight on Sunday it had sent more than a billion packages.

A disproportionately large number of sales were recorded in the first minutes of the 24-hour spending spree, when a huge queue of transactions went through for pre-ordered items. The company settled about $1bn within the first minute and 25 seconds after midnight.

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

JD.com, which also does a longer Singles’ Day sales event culminating on November 11, said sales in the period had hit $23bn in 2018, up about 26% from 2017.

“With an increasing number of promotion events a year, consumers no longer feel that Double 11 is the only opportunity to get good bargains,” said Pedro Yip, partner at consulting firm Oliver Wyman. “Having said that, there are more consumers who still enjoy shopping at Double 11 than those that don’t,” he said.

Reuters

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