China’s Singles Day is becoming irrelevant

We’re less than a week away from Singles Day, the online shopfest in which hundreds of millions of people across China spend billions of dollars on discounted stuff. Last year’s event hit a record US$30.7 billion within 24 hours.

While that’s an astonishingly large number from the world’s biggest ecommerce market, the truth is that the event is just nonsense. The November 11 sales bonanza is becoming irrelevant.

The first problem is that the widely publicized Singles Day sales figure stems from just one company: Alibaba.

Photo credit: Mike Petrucci / Unsplash

And Alibaba itself is losing its stranglehold on China’s online shopping industry as new rivals emerge. While Jack Ma’s company accounted for well over 70% of the vast market when Singles Day began earlier this decade, that share is set to plummet to 56% this year – and by 2022 it’s on course to make up less than half of China’s online spend.

So when you see the Singles Day tally next week, remember that the figure is likely the one from Alibaba, and it’s therefore representative of just about half of what Chinese consumers really spent.

Alternative events

But that’s not the only issue.

As Alibaba’s influence wanes, Singles Day might be on the path to extinction if one of its rivals opts to set up an alternative day of dizzying discounts.

That’s what is happening in Indonesia, where homegrown shopping startup Tokopedia made the “conscious” decision not to participate in the increasingly global shopping event, despite counting Alibaba among its big-name investors. Tokopedia CEO William Tanuwijaya recently explained at our annual Jakarta conference that the November 11 date “doesn’t mean anything for Indonesia.” And so instead, the startup established its own shopping day, Ramadan Xtra, at a time when Indonesians have Ramadan bonuses burning holes in their pockets.

Indeed, longtime Alibaba archrival JD.com has already subverted Singles Day by extending it to the first 11 days of November, perhaps in the hope of bagging consumers’ expendable income before Alibaba can snag it on Singles Day.

Smoke and mirrors

Another issue facing Singles Day is slowing growth – last year’s total spend was up 24%, as compared to 44% in each of the past two years, as noted in a McKinsey & Company report.

That will likely push major brands – an important part of Alibaba and JD’s marketplace apps – to “look at new avenues of growth for Singles Day,” the report notes. This might take the form of pulling shoppers into brick-and-mortar stores with promotions in the hope of more impulse purchases once they get their hands on discounted items.

Also, let’s not pretend that the Singles Day stat wasn’t infallible in the first place.

The sales event relies on marketing – both from online shopping companies and from the brands participating in Singles Day discounts. A torrent of ads can lead to a spike in one-off sales, which means that the Singles Day total might be a measure of marketing might rather than consumer confidence.