What to Expect 11.11

Alibaba CEO Daniel Zhang speaks in front of a display showing total sales of over 213.5 billion yuan ($ 30.7 billion) right after the end of Nov. 11, or "Singles Day" shopping festival, at 2018 Thall 11:11 Global Shopping Festival Gala in Shanghai early November 12, 2018.

STR | AFP | Getty Images

Singles Day or 11.11, is the biggest trading day of the year for singles, as Chinese online retailers led by Alibaba offer huge discounts on everything from electronics to cars.

Takes place on November 1[ads1]1 every year, Singles Day is believed to have started in the 1990s by men who celebrated being single at universities.

In 2009, Alibaba launched its first shopping event that day, offering heavy discounts on the Tmall shopping platform. That year, gross sales value – or the value of goods sold via Alibaba platforms – was $ 7.8 million.

Last year, the figure was more than $ 30 billion – a new record for the Chinese technology giant.

In order to continue growth, in light of the ongoing US-China trade war, which is slowing Chinese growth and increasing competition, Alibaba has expanded its offering to new product categories and experiences.

Star power and live streaming

Alibaba usually kicks off singles The day of a gala event concludes just before midnight on November 11. Last year, Mariah Carey staged a performance, and this year Alibaba recorded American pop star Taylor Swift. The Gala, which is streamed online, often shows off some of the brands that will be offered and prompts users to start pre-ordering.

Live streaming has become a major part of the shopping experience at Chinese e-commerce sites. Often, online personalities will talk to their followers and talk about products.

Within the livestream, there will be an alternative to purchasing the goods. Alibaba's Taobao and Tmall platforms have this feature. On Wednesday, Kim Kardashian made a livestream announcing that the fragrance brand KKW will be available for sale on Tmall.

Kim Kardashian made a live stream on Alibaba's Tmall platform to announce her fragrance selection KKW would be available for purchase on the e-commerce site.

Tmall | Alibaba

Companies sell goods from cars to cosmetics via live streaming. Alibaba said on the first day of the pre-sale that more than 17,000 brands started live streaming. Chinese smartphone maker Xiaomi's livestream drew over 200,000 viewers online in the first 10 hours.

Short videos are also very popular in China, and live-streaming commerce is catching on with that trend. Xiaofeng Wang, senior analyst at Forrester, said that consumers can often receive exclusive discounts when watching live broadcasts.

"Livestreaming offers many exclusive deals that add to the pressure. Livestreaming can be a few minutes or 30 minutes, within the time they provide exclusive deals. That's another motivation for consumers," Wang told CNBC.

More items for sale

Alibaba said that 1 million new products will be offered during the Singles Day festival. Over the past few years, the categories of available goods have expanded.

Users can, for example, buy cars. In fact, Alibaba said that on one of its Taobao live streams, 55 cars were sold in just 1 second. International car brands are also participating in this year's Singles Day event.

Meanwhile, Alibaba's travel arm is offering packages for the 2020 Tokyo Olympics. Disney also offers discounted tickets to the Shanghai theme park.

International brands are expected to play a major role. In China, 60% of consumers plan to buy imported products, according to a survey of 1,000 people conducted by management consulting firm Oliver Wyman.

Of the 200,000 brands expected to participate in the 11.11 festival, 22,000 will be from 78 foreign markets, according to Alibaba.

International efforts

Singles Day used to be a phenomenon open to Chinese consumers only, but Alibaba has been looking to expand its reach to increase sales and as the e-commerce giant continues to operate overseas.

Lazada, a Singapore-based e-commerce site that operates throughout Southeast Asia and is majority-owned by Alibaba, has its own sales.

And Alibaba-owned AliExpress, will allow local merchants from Russia, Spain, Italy and Turkey to participate in the 11.11 sales event for the first time.

What this means for the business

Alibaba is expected to bring in $ 37 billion GMV for this single day, according to Forrester forecasts – which is an increase of about 20.5%. That the growth rate is slower than the increase from the previous year of around 27% registered in 2018.

Wang said this is not a cause for concern.

"As a market matures, you cannot continue to grow at a high level double-digit each time. Just as the Chinese economy used to be double-digit growth, it is only single-digit now. It is natural, it is still growing, it is still a big market, it's a positive one, "Wang said.

The December quarter tends to be Alibaba's largest of revenues, in part thanks to Singles Day.

While trade is still the largest part of Alibaba's overall business, long-term analysts see the rapidly growing cloud business as crucial to profits.

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