China’s Alibaba records ‘singles day’ sales of $8bn in 10 hours

Shoppers spent nearly $8 billions in the first 10 hours of Chinese e-commerce giant Alibaba’s “singles day” event on Wednesday. In comparison, desktop sales for the five days from Thanksgiving through to Cyber Monday in the US stood at $6.56bn in 2014.

“Singles day” is not a traditional Chinese festival, but Alibaba has been pushing the 11 November date – named after the digits it contains – since 2009 as it looks to tap an expanding market in internet shopping in China, which has the world’s biggest online population of 668 million people. The success of Singles’ Day demonstrated how e-commerce companies can manufacture consumer demand through promotion. Chinese consumers have a lot of money in their hands, and online retailers need to customize their products to serve these increasingly savvy urban consumers.

Alibaba’s e-commerce platforms benefit from network effects and increasing returns to scale. More merchants and product selection lead to more consumers which lead to more merchants etc. That feedback loop works at the individual platform level (i.e. Alibaba.com, Taobao, Tmall). Alibaba has been able to extend that across platforms and create an ecosystem of platforms. The success of Alibaba.com was a customer acquisition engine for Taobao and some merchants moved over. Later and still to this day Taobao is a customer acquisition engine for Tmall.

The rise of Alibaba can be contribute to its local knowledge. It understand the local buyers and sellers better than western competitors.

Original news: http://www.bloomberg.com/news/articles/2015-11-12/alibaba-singles-day-draws-record-sales-amid-economic-concerns

 

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