How Alibaba Grossed More than $14bil in a Single(s’) Day

November 11th is Singles’ Day in China. Small until Alibaba made it big, the day was originally a time to celebrate being single by giving yourself a gift. Now a “frenzy of consumerism,” Singles’ Day is on 11/11 because the four ones-1-1-1-1 resemble four bare single sticks.

Speaking as the House of Cards (fictitious) 45th president of the U.S., Kevin Spacey wishes us a happy Singles’ Day.

https://www.youtube.com/watch?v=Ay5KOu5ZDug

Where are we going? To what consumers buy in different countries.

Singles’ Day

Mostly through online spending, Chinese consumers placed more than 120,000 orders a minute yesterday. To process and deliver those orders, Alibaba says its logistical units and its partners had 1.7 million couriers, 400,000 vehicles and 200 planes. After 12 hours they topped last year’s gross merchandise volume of $9.3 billion. By the end of the day, the total was $14.32 billion.

Our Bottom Line: Consumer Spending

China

Looking at the Chinese consumer, the following chart from McKinsey shows how they spend their money. Do notice that spending on necessities like food gradually becomes relatively smaller as discretionary spending grows.

Other Countries

Meanwhile, this chart (below) reveals that consumer spending reflects the impact of government and national wealth. When healthcare is primarily private as in the U.S., it takes proportionally more from the consumer’s wallet than where the government pays. Similarly, if government subsidizes housing then more remains to spend elsewhere. Still though, it all comes down to national wealth. In richer countries like Australia food requires a smaller percent of total spending .

From: the Economist

I guess we can return to where we began. During Singles’ Day, Alibaba has created the incentive for considerable consumer spending by offering heavily discounted discretionary items and necessities.