{"id":14543,"date":"2016-11-14T20:10:24","date_gmt":"2016-11-15T01:10:24","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/alibaba-and-singles-day-sales\/"},"modified":"2016-11-14T20:10:24","modified_gmt":"2016-11-15T01:10:24","slug":"alibaba-and-singles-day-sales","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/alibaba-and-singles-day-sales\/","title":{"rendered":"Alibaba and Singles\u2019 Day Sales"},"content":{"rendered":"

Background<\/strong><\/p>\n

Symbolized by four 1s, Nov 11 is the so called \u201cSingles\u2019 Day\u201d in China, a festival created to celebrate singleton. In 2009, Alibaba decided to use this day to promote online shopping. Similar to Black Friday in US, Singles\u2019 Day Sales involves millions of shops offering huge discounts to consumers. The biggest difference is: all the participating retailers are online.<\/p>\n

The impact has proved to be phenomenal. At the beginning everyone considered Singles\u2019 Day Sales as a pure marketing ploy that will not be taken seriously. Yet now it has actually become the world\u2019s largest online shopping event. Even retailers in North America has started to use similar strategy to promote Singles\u2019 Day sales, just a few weeks before the traditional Black Friday. This year Alibaba reported a record 120.7 billion RMB (ca. $18 billion) worth of sales, a 30 percent growth from last year. [1]<\/p>\n

\"%e4%b8%8b%e8%bd%bd\"<\/a><\/p>\n

Why Alibaba succeeded<\/strong><\/p>\n

Technology development<\/em><\/p>\n

Dealing with an average of 750 million USD sales per hour is not an easy job. It is estimated that Alibaba receives more than 140 thousand orders per second during the peak time on Singles\u2019 Day. In contrast, VISA and MasterCard handle no more than 40 thousand orders per second. Alibaba used several mechanisms to deal with the challenge posed by this huge transaction volume. First, Alibaba used its \u201cAli Cloud\u201d resources to share part of the traffic. Ali Cloud is a cloud computing service platform with operations across the different geographic locations, including Hangzhou, Beijing, Silicon Valley, etc. By utilizing Ali Cloud\u2019s spare capacities and making different merchants share the same system resources, Alibaba is able to handle this huge transaction volume. Second, Alibaba developed its own database called \u201cOceanBase\u201d. In 2014 OceanBase carries out only 10% of all transactions and since 2015 OceanBase has been carrying out 100% of transaction without any omission. Behind this rapid growth is Alibaba\u2019s constant investment in technology development. [2]<\/p>\n

Mobile shopping<\/em><\/p>\n

During its IPO Roadshow, Alibaba claimed that it would increase its mobile monetization rate to surpass its PC monetization rate. Now it has at least partially achieved this goal. When Alibaba went public, its mobile monetization rate was just about 1.87%. With several quarters of growth, in Q2 2016 its mobile monetization rate has achieved 2.8%, higher than its PC monetization rate of 2.78%. In this year\u2019s singles\u2019 day sales, 85% of orders were sent from mobile phones. As consumers becoming increasingly accustomed to shopping through smart phone, I expect that this trend will continue in the future. [3]<\/p>\n

\"alibaba-mobile\"<\/a><\/p>\n

Relentless efforts fighting counterfeiters<\/em><\/p>\n

The issue of counterfeits has haunted Alibaba for many years. Early this year, Alibaba has launched an online platform aimed at countering fakes. The system will allow Alibaba to monitor suspicious listings and notify retailers that they need to provide independent proof of its authenticity. Retailers can also report whether their products have violated Alibaba\u2019s rules and anti-counterfeit laws. [4]<\/p>\n

 <\/p>\n

Challenges going forward<\/strong><\/p>\n

Logistics<\/em><\/p>\n

With Alibaba\u2019s sales volume, logistics is never a simple issue, especially in a country as big as China. In 2013 Alibaba formed Cainiao, a Fedex type affiliate, providing logistics solutions to millions of merchants online. The expansion of Cainiao has been phenomenal. Now it has 128 warehouses and 180,000 express delivery stations in China, providing same day delivery in tier 1 cities and next day delivery in tier 2 and part of tier 3 cities. And this is just the beginning of Alibaba\u2019s ambitious plan in logistics. In 2015 Cainiao announced that it would invest another 16 billion USD in the coming five to eight years to \u201c deliver everywhere\u201d. [5]<\/p>\n

\"_78914558_78914557\"<\/a><\/p>\n

Growth slowing down<\/em><\/p>\n

This year\u2019s 30% growth is significantly lower than last year\u2019s 60%, showing that consumers are becoming more reasonable and that Alibaba is facing more serious competition. Even though Alibaba is driving the whole Singles\u2019 Day Sales, its competitors have quickly catch up by offering deep discount in their respective areas. For instance, JD.com, Alibaba\u2019s local competitor that is more focused on consumer electronics, has seen 130% growth in its sales in 2015 Singles\u2019 Day and 60% growth in 2016. JD.com also made significant investment in its own logistics system. Therefore, Alibaba needs to do more in order to differentiate itself from other competitors.<\/p>\n

 <\/p>\n

What US retailers can learn from Alibaba<\/strong><\/p>\n

Admittedly situation in US is very different from in China. It is very hard to imagine Amazon tell its merchants that they can only post things with at least 50% discount.\u00a0Yet US retailers do can learn from Alibaba\u2019s theme-building tactics. Now in China Singles\u2019 Day is no longer about single people but rather everyone\u2019s carnival. Perhaps US retailers may consider creating similar momentum to create topics and boost their sales.<\/p>\n

 <\/p>\n

Word Count: 783<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Reference:<\/strong><\/p>\n

[1] http:\/\/www.bbc.com\/news\/37946470<\/a><\/p>\n

[2] https:\/\/www.infoq.com\/news\/2012\/12\/interview-taobao-tmall<\/a><\/p>\n

[3] http:\/\/www.businessinsider.com\/alibaba-is-effectively-monetizing-mobile-2016-8<\/a><\/p>\n

[4] http:\/\/www.forbes.com\/sites\/greatspeculations\/2016\/07\/25\/fighting-counterfeits-is-critical-for-alibaba\/#6da111d65f97<\/a><\/p>\n

[5] https:\/\/techcrunch.com\/2016\/03\/14\/alibaba-backed-logistics-firm-cainiao-lands-funding-at-a-reported-7-7b-valuation\/<\/a><\/p>\n

[6] http:\/\/knowledge.wharton.upenn.edu\/article\/what-u-s-retailers-can-learn-from-alibabas-singles-day-success\/<\/a><\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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