Spurred by China’s burgeoning Internet population and increasing online retailers, Alibaba Group Holding Limited (BABA) recorded sales volume of more than $2 billion in the first hour and 11 seconds of Nov 11 and is expected to carve a record this year. IDC predicts that this Singles Day could be the biggest online spending day of all times. Thanks to the surge in e-Commerce, record-breaking Internet traffic and sales were witnessed on the day.
How High Can Alibaba’s Singles Day Sales Go?
Singles Day — also known as 11/11 — began to be celebrated by the Chinese youth in 2009, which gradually evolved into the world’s biggest 24-hour online shopping event.
Alibaba, which heavily promotes Singles Day, encourages most retailers to give heavy discounts on this day. Additionally, majority of the brands offer special deals on such Hallmark holidays, including Valentine’s Day, Singles Day and Sweetest Day to ensure that shoppers keep coming back.
Backed by the attractive deals, Alibaba’s sales shot up a massive 5,740% from 2009 to over $5.7 billion on Singles Day last year. This year, Alibaba expects to touch a record $8.2 billion or 50 billion yuan in sales on Nov 11. Going by IDC’s estimates, Alibaba’s sales volume should reach about $8.65 billion, up nearly 50.4% from last year and soaring 184.5% from 2012. This is because more consumers will shop online on the day via mobile devices.
Alibaba has left no stones unturned to drive its Singles Day sales. The company’s business-to-consumer (B2C) online platform — Tmall — solely dedicated to official brand stores and retailers, has recently allowed foreign brands, such as Costco Wholesale Corp. (COST) and Tesla Motors, Inc. (TSLA) to reach Chinese consumers via its network. Additionally, Alibaba CEO, Jack Ma, stated that the Singles Day deals will reach consumers in more than 220 countries this year. While suppliers from more than 20 countries will be participating in the event, Tmall will facilitate transactions from more than 27,000 sellers.
Since Alibaba went public on the New York Stock Exchange (NYSE) in September, its share price has surged more than 72% from its record $25 billion IPO price. Given Alibaba’s strong dominance in the mobile search market, cross-border expansion and its continuous efforts to develop new products, the company’s Singles Day sales could touch new heights, further strengthening its foothold in the e-Commerce market.
Alibaba is a very strong player in the Chinese e-Commerce market and its success could hurt local players, including Tencent Holdings Ltd. (700), JD.com, VIP.com and Suning, which are offering huge number of deals on this Singles Day for the first time.
Alibaba currently carries a Zacks Rank #3 (Hold). Mercadolibre, Inc. (MELI) sporting a Zacks Rank #1 (Strong Buy) is a better-performing stock and is worth considering.
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