Alibaba rocks Singles Day

Jack Ma took Alibaba Group Holding on the road to Beijing in search of a new Singles’ Day sales record, and it worked.

Beijing - Jack Ma took Alibaba Group Holding on the road to Beijing in search of a new Singles’ Day sales record, and it worked.

Transactions on this year’s event passed 57.1 billion yuan ($9 billion) before midday, eclipsing the 2014 mark with another 12 hours still to go.

China’s biggest e-commerce emporium moved the base for its annual shopathon to the former Olympic aquatics center in the capital as Ma tries to reverse the company’s $55 billion plunge in market value. Shifting from its Hangzhou home to the heart of Chinese power shows Alibaba’s ambitions to maintain growth, penetrate the northern region where rival JD.com is based and answer the government’s call for “national champions” in technology.

“The move is symbolically significant because it indicates that Alibaba, by moving to the capital, is China’s indisputable e-commerce leader,” said Cyrus Mewawalla, managing director of London-based CM Research. “Politically, it might be a tacit acknowledgment that Alibaba, a national champion, now has to be closer to China’s authorities and more in tune with the government’s strategic interests.”

Rising incomes

Going to the political, economic and media hub comes after Alibaba’s roller-coaster first year as a public company. A record offering was followed by a record fall below the initial price, allegations the company wasn’t doing enough to fight counterfeits on its platforms, and the replacement of its chief executive officer.

Ma kicked off the event with a four-hour variety show that included a performance by “American Idol” finalist Adam Lambert and an appearance by Daniel Craig, star of the James Bond films. “House of Cards” star Kevin Spacey also made a YouTube video. Alibaba estimates that 1.7 million deliverymen, 400 000 vehicles and 200 airplanes will be deployed to handle packages holding everything from iPhones to underwear.

Slowing economy

Simultaneously, China’s economic expansion slowed to a 25- year low, putting pressure on corporate profits. Yet Alibaba was able to post quarterly sales that climbed by almost a third after it boosted advertising targeting shoppers able to hold on to more of their money.

“We’re seeing more and more consumers shifting to mobile,” CEO Daniel Zhang said Tuesday night. “That’s why we’ve prepared special promotion sessions during peak commute hours, so people can shop on their phones.”

That was underscored by data from Alibaba showing that 27 million people were shopping on mobile phones, fueling 72 percent of early sales.

Alibaba shares were little changed at $81.43 at the close Tuesday in New York, putting the stock down 22 percent this year.

Apple, Lego

The nation’s per capita disposable income rose 7.7 percent in the first nine months from a year earlier - after adjusting for inflation - outpacing the 6.9 percent rise in gross domestic product. Participation and spending by consumers is expected to increase this year, with clothing and footwear being the most popular category, according to a survey by Nielsen Holdings.

Alibaba’s Singles’ Day turnover may soar to 87 billion yuan, according to researcher IDC. The prediction for a record comes as China re-balances the economy away from relying on investment toward greater consumption. China is releasing October retail sales figures on Wednesday afternoon.

“Chinese consumers are living in a super-connected world where the convenience of online shopping has become the norm,” Yan Xuan, president of Nielsen Greater China, said in a statement. “We expect this growth trend to continue.”

‘Bare branches’

Singles’ Day, a Chinese twist on Valentine’s Day, was invented by students in the 1990s, according to the Communist Party-owned People’s Daily. When written numerically, the date is reminiscent of “bare branches,” the Chinese expression for bachelors and spinsters.

The Singles’ Day promotion started by Alibaba on November 11, 2009, was copied by rivals and has morphed into China’s biggest excuse to shop online. Some of the world’s most popular brands - including Apple, Nike, Lego - flood Alibaba’s websites with promotions and discounts.

For the first six years, the results were tabulated during a ceremony held at the company’s headquarters in Hangzhou, eastern China. Alibaba said it decided to shift to Beijing because of the city’s influence.

“The globalisation of November 11 and of Alibaba has to start from Beijing,” Alibaba wrote in an October 13 post on its official Weibo account.

Moving the event also allows Alibaba to take advantage of the capital’s media machine, said Jeff Hao, a Hong Kong-based analyst at China Merchants Securities Holdings. The company said in September it was adding Beijing as another headquarters, with an eye toward the northern China market.

“Alibaba wants this event to be high profile - Beijing has the kind of media resources that it will need,” Hao said. “Gaining exposure is a means to ensure growth this year.”

BLOOMBERG