Nov 13, 2017
Jack Ma, center, with Dagvadorj Dolgorsurengiin, Donnie Yen, Nicole Kidman and Wu Jing. Photographer: AFP via Getty Images
Alibaba Group Holding Ltd.’s Singles’ Day generated a record 168.2 billion yuan ($25.3 billion) in sales, as the e-commerce giant worked with more traditional retailers to market discounted lobster, iPhones and refrigerators to shoppers from at least 225 countries and regions.
To pump merchandise, the Chinese company also hosted a star-studded gala with film star Nicole Kidman and American rapper Pharrell Williams. Chief Executive Officer Daniel Zhang said the company wants to make the event more global, and is planning to take its gala overseas soon, without giving a time frame.
Now, it’s become an excuse for people to shop and binge on entertainment shows. Hangzhou-based Alibaba is using the occasion to test the limits of its cloud computing, delivery and payments units -- businesses that could benefit from roping in traditional retailers as customers.
Staff pose in front of a screen showing sales of over 168 billion yuan at the end of the Singles Day festival. Photographer: AFP via Getty Images
To connect a 10th of China’s six million convenience stores to the internet, Alibaba uses an app called Ling Shou Tong, meaning “connect retail.” Convenience stores are given suggestions on what to procure and how to display merchandise. The goods are shipped from dedicated Alibaba warehouses, obviating middlemen. In theory, that improves their profit.
The company is also converting 100,000 retail outlets into so-called smart stores. Brands including Levis and L’Oreal are taking part. If one shop runs short of certain inventory, customers can track availability at other locations. They can also get goods delivered to their home.
It’s early days in Alibaba’s grand retail experiment, but if it works, it could deepen a lead over Jeff Bezos’ Amazon.com Inc. in the fragmented world of physical retailing. Ma’s company spent billions buying into grocers, shopping malls and even department stores years before Amazon announced its $13.7 billion acquisition of Whole Foods Market Inc.
Alibaba is already starting to see the initiative trickle into the top line. Revenue from new retail -- mainly its Hema supermarkets and Intime department store -- more than quintupled in the September quarter. As with convenience stores, Alibaba is trying to franchise the Hema model that combines a supermarket, restaurant and fulfillment center in a single location on its technology platform.
A customer walks through a Hema Store in Shanghai, China. Photographer: Qilai Shen/Bloomberg
The company recently bought control of unprofitable delivery business Cainiao Smart Logistics Network Ltd. It oversees a coterie of more than a dozen shipping partners, orchestrating deliveries carried out by millions of people across more than 600 cities. Alibaba has said Cainiao expects 3 million people to handle packages during the 24-hour-period.
"On the back of 11-11, we will probably have to distribute north of 700 million packages,” Evans said. “That is a massive, massive number of packages that requires a robust logistics network both in China and outside of China, and we will continue to invest in that business, and by moving to a controlling position, we will be able to ensure the right degree of quality."
— With assistance by Annie Lee