On Sunday, the biggest consumer frenzy in history will take place – in China, of course.
The one-day shopping celebration is the brainchild of e-commerce giant Alibaba (Exchange: New York; ticker: BABA). As shown below, it’s the biggest event of its kind — anywhere. (We’ve written about it previously here.)
In 2017, Singles’ Day generated an incredible US$25.3 billion in sales, solely online through Alibaba’s two e-commerce portals, TMall and Taobao.
By comparison, Black Friday (the big shopping day after the Thanksgiving holiday in the U.S.) in 2017 generated just over US$5 billion in sales. Cyber Monday (the day after Thanksgiving weekend in the U.S., featuring online sales) generated US$6.6 billion in revenues. The combined sales of the two largest one-day sales events in the U.S. amounted to less than half of China’s Singles’ Day revenue.
Moreover, that US$25.3 billion in Singles’ Day sales last year was equivalent to one-eighth of Amazon’s revenues for the entire year in 2017. That’s in just one day.
During last year’s Singles’ Day event, over 90 percent of total online sales were made through a mobile device. That’s a result of China’s push to promote online payments, which they see as key to unleashing the spending power of the nation’s growing middle class.
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In total, more than 812 million orders were placed during last year’s Singles’ Day, or about 9,400 orders every second. That’s the same as 60 percent of the entire population of China placing an order. Or it’s like every person in the U.S. placing between two and three orders – again, all in a single day.
These orders were processed by Alibaba Group’s Cainiao Network, which operates a network of automated warehouses to deliver products to customers. Thousands of robots equipped with artificial intelligence were mobilised, transforming Alibaba’s supply chain into a well-oiled machine.
To handle delivery, Cainiao partnered with 15 major Chinese express-courier companies to crunch logistics data using artificial intelligence. This ensured that manpower and transportation were used more efficiently in the 200,000 delivery stations across the country involved in facilitating Singles’ Day.
It’s growing fast
Between 2011 and 2017, Singles’ Day sales have posted a compound annual growth rate (CAGR) of 77 percent. Last year alone, it grew 40 percent. That was even faster than the growth of China’s total e-commerce sales for the year (32 percent), based on figures from China’s Ministry of Commerce.
This year, China’s total e-commerce sales are expected to grow 33 percent to US$1.53 trillion, according to eMarketer.com. That’s more than three times faster than the expected rate of growth in China’s overall retail market.
That would place the e-commerce share of the country’s total retail sales (seen reaching US$6.4 trillion in 2018) at about 24 percent. By comparison, global e-commerce sales accounted for just 10.2 percent of total retail sales last year, while U.S. e-commerce sales made up just 9.6 percent of total retail sales.
Of course, the law of big numbers tells us that this kind of growth will slow down. Growing 77 percent from a billion dollars is a lot easier than growing by the same amount from US$25 billion.
But in any case, China is leading the world in e-commerce. The upcoming Singles’ Day event is important because it will show just how fast this market is growing. And if you want to make a lot of money investing, you go where the growth is.
Editor, Stansberry Churchouse Research
P.S. China’s growing e-commerce industry is a global economic force to be reckoned with. It’s already given rise to multi-billion success stories like Tencent (US$362 billion market cap) and Alibaba (US$392 billion market cap), and will continue breeding more winners. These are the types of opportunities we look for in Strategic Wealth Confidential. For example, our Chinese e-commerce recommendation is already up 10 percent since October. Find out more here.