For the past two years, Supply Chain Matters has provided visibility to Alibaba and in-particular, Singles Day, China’s largest online shopping event. As we continually point out, we can sometimes get enamored with online names such as Amazon.com and WalMart.com but Alibaba and its various online shopping sites is indeed an evolving player to reckon with in this era of online commerce and changing retail supply chain customer fulfillment. Last Friday was no exception amid reports that this year’s prominent shopping event across China once again broke records for shopper interest and order volume.
China’s Singles Day is somewhat equivalent to Black Friday or Cyber Monday in terms of an online shopping event. The event was conceived by students in the 1990’s as a mock celebration for people not in relationships, with a desire to give something to oneself. It traditionally occurs on the 11th day of the 11th month or Double Eleven, since when written numerically, November 11th represents “bare branches”, a Chinese expression for bachelors and singles. Chinese consumers literally save their meager discretionary incomes while researching potential purchases for months in anticipation of this event. In 2015, the online shopping event racked up the equivalent of $14.3 billion in shopping revenues for various Alibaba sites, surpassing that of Black Friday.
Singles Day 2016 was preceded By a nationally televised Internet streaming celebrity entertainment event held in a 60,000 person stadium in Shenzhen hosted by Alibaba Chairmen Jack Ma. A running tally was continually updated on video screen at the Stadium and online, and by 3:15pm local time, the 2015 sales volume number has been exceeded.
In total, Alibaba indicates that the equivalent of $17.7 billion in online sales were processed during this year’s 24-hour event.
Controversy still surrounds this event with critics claiming that orders are either inflated and never ship or prematurely canceled after entry in order to run-up overall numbers. Since Alibaba stock is now publicly traded on the New York Stock Exchange, the U.S. Securities and Exchange Commission (SEC) is providing added scrutiny of reported volumes, and Alibaba is reportedly cooperating in this effort.
Another significance to this event is the overall logistics required to deliver ordered goods to their designated recipients which reside in either high density urban areas or rural areas of the country. While we often report on the likes of Amazon, FedEx, UPS and other parcel delivery firms marshaling their vast networks to process Black Friday or Cyber Monday delivery volumes, Alibaba primarily owns its own parcel delivery logistics entity, Cainiao, along with close relationships with other logistics providers that insure that packages are delivered to expectations amid a number of residential delivery challenges across China’s high density urban and rural landscapes. The online firm estimates that 1.7 million delivery persons and over 400,000 vehicles were deployed to deliver package volumes in 2015. Photos of parcel sorting and fulfillment centers indicate the flood of packages that overwhelm such centers. Just as critical, however, is the network of delivery vehicles and delivery persons who must navigate complex or vague delivery addresses or who must utilize ingenious means to transport volumes of packages among dense urban streets and alleyways.
As with our prior commentaries, the takeaway from China’s Singles Day online shopping event remains a realization that while Amazon and other online retail platforms can often garner a lot of visibility across the U.S. and Europe regarding sheer volume in a singular promoted event, Alibaba has its own significant capability that continues to break records.
© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.