How Alibaba’s Sales Hit $9.3 Billion on 11.11
11.11, The Magic Day of Alibaba — The Largest IPO Ever
All of a sudden, Alibaba really had an “open sesame” moment by raising $25 billion in its record-breaking IPO, the largest one in the world.
“I never thought the money I have belongs to me. It belongs to society.”
-Jack Ma
If you want to witness the magic power behind Alibaba, you need to know what happened on November 11th, 2014 in China; Tmall, one of the E-commerce sites owned by Alibaba, reached $9.3 billion in sales in a single day.
Quick Introduction about Alibaba
“It is a marketplace, search engine and bank, all in one.”
You can compare Alibaba as a combination of Amazon, eBay and Paypal. As the largest ecommerce company, Alibaba dominated 80% of China’s online shopping market.
The 6th 11/11 Online Shopping Festival – Rome was not built in a day
November 11th (11/11) is known as “Singles Day ” or ”Anti-Valentines Day ” among millennials in China simply because “1” means single. Five years ago, to promote the newborn site, Tmall, Alibaba decided make this day a shopping festival, hoping to capitalize on singles who were jealous , to go into what is called retail therapy.
From $ 7.6 million in 2009 to $9.3 billion this year, the number is just the tip of iceberg. What supports it is the changes in shipping method, cloud technology, financial services, customer preferences and retailer business model.
2009- Joined Because of Partnership Pressure
The first year of 11.11 being a shopping festival, there were only 27 vendors who joined together within Tmall, offering discounts up to 50%. With the mentality of “trial, inventory clearance and partnership pressure”, vendors didn’t expect magic to happen but the sales of this event surpassed far more than the norm as it reached $ 7.6 million.
2010- Printers “Burned”
GMV (Gross merchandise volume) jumped to $137.6 million, which is more than the total daily sales of the whole Hong Kong. Some products were sold out even before morning was over. The amount of orders coming in were so extreme that printers broke down. Due to unexpected volume of orders and severe snow during that year gave third party shipping companies a difficult time to operate smoothly and efficiently. This warned Alibaba to think about shipping integration.
2011- Banks “Died”
The highlight of this year is a single vendor’s sales surpassed $1.7 million with total GMV reaching $494 million. Online shopping through Alibaba has become a significant channel for buying brand products. Many brands reacted positively to the conflicts between online and offline shopping. Several corporate banks “died” and “emergency fixed” themselves. Alibaba learned a lesson and decided to speed up its development in financial services.
2012-National Shopping Festival
GMV hit $3.1 billion, an astonishing number for all the retailers within Alibaba. Tmall started to interact with customers and developed a new selling model such as pre-sale. Meanwhile, the major competitors and offline stores began to join together on this day to share “the cake”. 11/11 literally became a national shopping festival since then.
2013-Mobile and Cloud
Tmall once again raised the bar of sales records by reaching $5.78 billion with 170 million orders. It’s more than Black Friday and Cyber Monday combined in America! The most important factor is that 25% of orders were made through mobile. Also, Alibaba’s cloud ERP management system “Jushita” played an important role by handling 75% of orders in that year.
2014- Broke Records
Alibaba never lets us down. This year, Tmall’s sales hit $9.3 billion, RMB 57.1 billion! $4.08 billion were made via mobile accounts which was 42.6% of their sales and 97% of orders were computed by “Jushita”. Two Guinness World Records were broken: Most (1,894,867) mobile phones sold in a single online platform in 24 hours and; Highest online retail sales ($9.3 billion) in 24 hours in a single company. Tmall (Heavenly cat in Chinese) became known as “crazy cat”.
But why people so crazy about 11.11, you ask?
Promotion, Promotion and Promotion!
Just as everybody knows and expects, the biggest discounts are on Black Friday. People have always waited for 11/11 for a long time and they get ready to fight for low pricing bids and coupons. Its success cannot live without the incredible and exciting promotion strategies!
“Reveal” the Real Sale
Nowadays, customers are overwhelmed by stores’ tricky pricing strategy. Some merchants raise their price tags before putting them on sale. A question aroused in public: is 11.11 really cheaper? There are always kind-hearted people to help us solve the puzzle on social media. Some vendors posted “Regulations For Vendors To Attend 11.11”. It says the price must be at least 10% lower than the lowest price between Sept. to Dec. This convinced online shoppers that 11.11 must be the real deal.
Another question arises: what should we buy on 11.11? A bunch of recommendation lists came out and has gone viral online. Some lists compared prices and discounts that big brands have in each category, ranked those brand who have biggest discounts and those who have “fake” discounts. We are not sure if these recommendations are generated by users or Alibaba itself. Only one thing is for sure, these lists successfully caused people to dig holes in their pockets.
Win Bonus for Filling Alipay Accounts
To encourage people to pull their money out of their wallets to Alipay accounts, Alibaba made is so that every time you fill your account with over RMB150 ($24), you’ll have a chance to win RMB50 bonus. The more you put in your Alipay account, the bigger the bonus you can win. Also, senior buyers have a bigger chance to win a bonus.
One of my friends stated, “It’s stupid to put your money in your savings account. Even though the chance to win the bonus is really small due to the large volume of accounts, there is nothing to lose if you don’t win one. ”
Hourly Sec-kill Product
11.11 is not a day where you buy what you want one time and then go do something else. It is more of a game that needs you to stay online for the whole day. Every hour, Tmall releases specific products with over 90% off called “Sec-kills”, which means they would be sold out within seconds. Eventually, more and more global brands joined, such as Samsung, Apple, Uniqlo, Gap, Calvin Klein, etc. Particularly, motor brands such as Tesla and Mercedes also promotes specific models this way. That’s why people are still willing to stay up late to try to get them.
Physical Stores Embrace 11.11
11.11 surely has had a huge impact on sales of physical stores. Instead of competing or resisting online stores, this year, brands actually embrace online shopping. Physical stores became showrooms for online stores. It was nothing shameful anymore. They encourage customers to experience the products offline and then buy it online. Posting pictures of products in physical stores on social media can get online stores’ coupons or raffles.
Other promotions includes mysterious gifts sent to random customers before 11.11, interactive games to win bonus money, etc.On social media, Tmall’s creative team used trending words and celebrities to amplify its influence.
Alibaba is clearly an example that shows us how an idea with enough motivation, anything is possible in business. We’ll be expecting Alibaba to continue this miracle in the years to come.
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§ This post is part of Inbound Marketing Clinic, a research project at NYU SPS
