Alibaba sold in 1 day as much as Amazon sells in 3 months – The Fool Motley

Chinese e-commerce leader Ali Baba (NYSE: BABA) has just completed its ninth annual Singles Day sale and broke all records by selling $ 30.8 billion worth of products.

To put this into perspective, the five-day launch of the Christmas shopping season that begins Thursday, Thanksgiving Day, and continues the following Monday, called Cyber ​​Monday, generated sales of $ 19.6 billion. dollars. And that's for all the retail business. Alibaba's sales figure does not include sales generated by other Chinese retailers, such as its biggest rival, JD.com (NASDAQ: JD), which sold $ 23 billion worth of goods (though over a period of 11 days, although most of it happened on the same day of the singles party).

Source of the image: Getty Images.

In other words, it took Amazon.com (NASDAQ: AMZN) three months to sell for $ 33.7 billion of merchandise in the third quarter, which also included its best-ever Prime Day event, estimated at $ 3.4 billion – in more than 36 hours. Alibaba has generated more than $ 1 billion worth of raw goods in less than a minute and a half and has exceeded the total of $ 25 billion last year in just under 15 hours.

A tsunami of sales

It is clear that Alibaba Singles Day is a monumental event. Started as a way for Chinese students to celebrate their celibacy, the day falls on November 11 and 11, which, in Chinese culture, represents "bare branches", or a way of saying that someone is single . It has since become a cultural phenomenon.

Alibaba started using the event in 2009 to boost sales and generate about $ 7.5 million in GMV this first year. Since then, it has increased every year thereafter, but the growth rate is slowing down. The business turnover of nearly $ 31 billion generated by the latter represents 21.7% more than in 2017, but is down from the 42% gain recorded last year . Three years ago, Alibaba's sales were more than double the current rate.

Data source: Alibaba. Graphic by author.

Of course, you can not expect sales to continue growing at such a torrid pace, not when you are talking about tens of billions of dollars. However, this also reflects the general economic slowdown seen by Alibaba, which recently revised downward its revenue growth forecast for the year from only 4% to 6%. Alibaba shares have fallen 27% in the last six months, reflecting general concerns about the slowdown in the Chinese economy and a break in trade with the United States.

The Chinese economy grew 6.5% in the third quarter, exceeding analysts' expectations and being lower than the previous year. Retail sales, however, grew by 9.2% for the period, exceeding expectations by 9%. Even then, experts remain skeptical about official government data.

Do it global

Singles Day is still a resounding success for Alibaba, who created something from scratch, but as the phenomenon grows, US retailers may want to hang on to it. There are several reasons to recommend this strategy.

A number of US retailers are already working with Alibaba and its subsidiary Tmall to offer sales during the event, although they are not available to US customers. This should be a simple process.

In addition, since the event will take place in November, it could help retailers increase their sales for Christmas soon. The holiday creep is already in full swing, so two weeks before Thanksgiving, most retailers are about to do so.

Retailers have begun to take advantage of Amazon's Prime Day by offering their own events and promotions, and as more and more people here are seeing Singles Day, expanding their sales at the same time may well start Christmas earlier.

Same but different

As amazing as Alibaba's numbers are, there are some caveats. Retailers participating in Singles Day actually accumulate sales in the days leading up to the event, but only process orders as of Nov. 11, making it more than a day-time phenomenon. If Amazon.com promoted its Prime Day several days, or even weeks in advance, by generating orders without processing it before the day of the sale, its sales would also be higher.

In addition, Alibaba is more like eBay Singles Day and Prime Day are not exactly the same, although Amazon also hosts third-party retailers and their own sales exceed $ 1 billion.

Carrying goods worth $ 30 billion in such a short time is not a trivial matter, but it could soon reach a saturation point for growth.

John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Rich Duprey has no position in the mentioned actions. The Motley Fool owns shares and recommends Amazon and JD.com. The Motley Fool recommends eBay. Motley Fool has a disclosure policy.