11.11 Sales: Alibaba Singles Day tones muted as China’s economy slows and tech crackdown continues
Since that first occurrence, Singles Day has turned into a shopping spree seen not only by Alibaba, but also by other e-commerce companies offering their own big discounts and promotions. The deals take place over several days or even weeks. It has also spread outside of China, with Alibaba’s Southeast Asian subsidiary Lazada offering deals in Singapore, Malaysia, Indonesia, Thailand and Vietnam.
An inflation puzzle
Alibaba and JD.com, however, hit new sales records this year. Alibaba said Thursday that the total gross merchandise volume (GMV) reached 540.3 billion yuan ($ 84.5 billion) in the first 11 days of November. This is an increase of 8.5% from a year ago.
But this rate of growth has been much slower than in the past. Last year, Alibaba recorded a 26% jump in this metric from the previous year.
Citi analysts also recently forecast that Alibaba’s total GMV could reach 578 billion yuan ($ 90 billion) in the first 11 days of November, a 15% increase from last year.
JD.com also posted record sales, with GMV reaching 349.1 billion yuan ($ 54.6 billion). This was up 28.6% from a year ago, slower than the 33% growth rate last year.
While Citi analysts wrote in a recent report that the promotional campaigns “started with strong consumer demand,” they added that they are “cautious” that general sentiment could be affected by a “weakening[ing] underlying economy. ”
The cost of goods leaving Chinese factories rose another record high last month – China’s producer price index jumped 13.5% in October from a year ago – and there are now signs that rising costs are being passed on. China’s consumer price index rose 1.5% in October from a year ago, double the rate the previous month and the fastest rate of increase since September 2020.
“On the one hand, soaring input costs have drastically reduced the profit margin for downstream manufacturers, which in turn limits the space to deliver a significant discount this year,” said Alicia Garcia Herrero, chief economist. for Asia-Pacific at Natixis, a French investment banking company. “On the other hand, domestic consumption has not yet returned to pre-pandemic levels[s] and even online retail sales, which remained relatively resilient in 2020, slowed. “
The misfortunes of repression
This year’s shopping event is also taking place under the shadow of a broad government crackdown on private companies.
Ecommerce businesses have not escaped this scrutiny and, in many ways, have been at the center of it. Alibaba was hit earlier this year with a record fine of $ 2.8 billion for acting as a monopoly, and the company has lost hundreds of billions of dollars in market value as Beijing’s reforms take shape .
JD.com, Tencent, Pinduoduo, Meituan and other companies have also been investigated or fined for alleged anti-competitive behavior.
“Large internet platforms appear to be more cautious in marketing and promotions this year to refrain from violating antitrust regulations,” said García Herrero of Natixis.
Alibaba said it will move from pure sales numbers – typically the title of each year – to sustainability and inclusiveness.
“This year’s Festival marks a new chapter for 11.11,” Chris Tung, Alibaba Group Marketing Director, said in a statement. “We believe we need to harness the power of 11.11 to encourage sustainability and promote inclusion among consumers, merchants and partners in our ecosystem.”
The company said it would showcase energy-efficient products on its services and distribute 100 million yuan ($ 15.6 million) in “green” coupons to encourage people to buy more sustainable products. She also wants to reduce the carbon footprint of the event by recycling the packaging she uses.
The company has also said it wants to support “vulnerable populations” and its Taobao app has introduced a “senior mode” option. The new feature is designed to be more accessible to older people with an updated interface and voice assist technology.
JD.com also announced that this year’s Singles Day will be “the biggest where renewable energy is used, and the one where [JD.com] will push for a reduced carbon footprint. “