By Professor of Marketing Jeongwen Chiang

If shopping is a national sport in China, Single’s Day is its World Cup. This year, Chinese internet giant Alibaba rang up US$ 5 billion in sales in the first hour of November 11. Its rivals are also cashing in on this sales bonanza; many traditional brick-and-mortar retailers are also offering deals to try and cash in on consumers’ 11/11 shopping fever this year.

Similar to Black Friday and Cyber Monday in the US, Alibaba created this event in 2009 to encourage young Chinese consumers to shop for themselves on a day popularly referred to as Single’s Day because of the many 1’s in the date. One of the retailers I have spoken to who has shops on Alibaba’s Taobao and Tmall marketplaces tells me that Single’s Day now accounts for about 16% of their total annual sales.

In the first five minutes after midnight on November 11, 2016 Alibaba said they made US$ 1 billion in sales. Much of this came from consumers who previewed the available bargains in the days before and loaded their online shopping carts ahead of the sale. This activity gives Alibaba something that is even more valuable than facilitating a sale; the data it collects in those online shopping carts lets it forecast what’s hot and what’s not, which in turn allows the shops on its platform to adjust their supply chains to match demand.

Alibaba isn’t just the world’s largest e-commerce platform – it’s a Big Data giant. They are penetrating all dimensions of consumers’ lives. They are not just about e-commerce, they are in the financial sector with their Alipay online and mobile payment services, and now they are trying to penetrate our lives through entertainment, education, healthcare, logistics – they want to be in every corner of our daily lives. Their Big Data capabilities will let them know everything about us. In the digital age, Big Data matters more than anything. Merchants on Alibaba’s platform will kowtow to the company because they will benefit from the rich detail it can share with them about China’s 1.3 billion consumers. 

Alibaba’s biggest rival, JD.com, tries to compete on reputation – one of their selling points is that they can better guarantee the provenance of their products because they source goods directly from the manufacturer, which is especially important in China where fake goods have proliferated. JD.com is also trying hard to develop its own logistics system and features expedited shipping service, similar to Amazon.com in the US. But I think Alibaba’s Big Data capabilities are such a big force, that it gives them the advantage over JD.com in the long run.    

Lots of attention will be paid to the eye-popping sales records that get set on Single’s Day – in 2015 Alibaba reported US$ 14 billion in 11/11 sales, and this year they hit US$ 17.73 billion. But little is said about the buyers’ remorse – shop owners I’ve spoken with tell me up to 30-40% of items sold on Single’s Day end up being returned. Think about all the wasted resources, the cardboard boxes, the fuel, and the costs that are expended on that.

The real winner at the end of the day is Alibaba. It doesn’t matter to them whether or not consumers hang on to those impulse-buy purchases, they already generated a trove of Big Data for the company to leverage. The more Alibaba knows about the consumer, the more they can sell this information to retailers with shops on their platform, and even other merchants. It’s a bit like Big Brother in disguise.