Singles Day: China's online shopping holiday

Sunday - 11/11/2012, 9:38pm EST

By JOE McDONALD
AP Business Writer

BEIJING (AP) - Lei Shujie, a designer in Shanghai, piled up a wish list for the quirky holiday dubbed "Singles Day" that has grown into China's _ and possibly the world's _ busiest online shopping day.

Clothes, a pillow, a cabinet to give a friend _ Lei put off buying until Sunday, when retailers promised discounts of up to 70 percent. "The prices are irresistible," she said.

Singles Day was begun by Chinese college students in the 1990s as a version of Valentine's Day for people without romantic partners. The timing was based on the date: Nov. 11, or "11.11" _ four singles. Unattached young people would treat each other to dinner or give gifts to woo that special someone and end their single status.

That gift-giving helped to turn it into a major shopping event as sellers of everything from jewelry to TVs to cars saw a marketing opportunity and launched Singles Day sales. It is China's answer to Cyber Monday in the United States _ the day after Thanksgiving weekend, when online Christmas shopping begins and merchants have their busiest sales day.

Companies that rushed to cash in on the holiday ranged from Alibaba Group, operator of China's biggest e-commerce platforms, to rival platforms such as 360buy Ltd., mom-and-pop companies that sell online and delivery services.

"This is very, very big for us," Steve Wang, vice president of Tmall.com and head of website operations, said in a phone interview before sales started.

The 50,000-plus merchants on Alibaba's consumer-oriented Taobao and Tmall.com platforms, took in a total of 19.1 billion yuan ($3 billion) from midnight Saturday to midnight Sunday, the company announced early Monday.

That would top the total of $1.25 billion that research firm comScore said U.S. online retailers took in last year on Cyber Monday and might make Singles Day the biggest e-commerce sales day on record.

The spending binge will be welcome news for communist leaders who want to shift the basis of growth in the world's second-largest economy from trade and investment to consumer spending and service industries. Weak global demand for Chinese exports has added to the urgency of ramping up domestic consumption.

China has the world's biggest population of Internet users, with 538 million people online. Its population of online shoppers also is the biggest at 193 million, versus 170 million for the United States, according to Boston Consulting Group. It trails the U.S. and Japan in online spending but, despite average incomes less than one-tenth the American level, is forecast to rise to first place as early as 2015.

The Communist Party's latest five-year development plan calls for more than quadrupling annual e-commerce volume from 2010 levels to 18 trillion yuan ($2.9 trillion) by 2015. The party tries to block access to online material deemed subversive or pornographic but promotes Web use for business and education.

"The Internet today in China is similar to television in the 1960s and '70s in the West _ the place where consumers congregate and companies need to locate," Boston Consulting Group said in an April report.

Alibaba, founded by a former English teacher, Jack Ma, grew into one of the world's biggest e-commerce players by linking Chinese suppliers with Western manufacturers and retailers. It branched into consumer sales with the 2003 launch of Taobao, which operates Tmall.com. Alibaba also operates China's biggest online payment system, Alipay.

Tmall.com accounted for 45.1 percent of business-to-consumer online sales in China in the three months ending in September, according to Analysys International, a research firm in Beijing. 360buy was in second place with 17.4 percent. Boston Consulting Group said more products were sold through Taobao in 2010 _ about 48,000 per minute _ than at China's top five bricks-and-mortar retailers combined.

"Alibaba has so many assets that they can integrate that it's hard to compete with them," said Mark Natkin, managing director of Marbridge Consulting, a technology consulting firm in Beijing.

Other rivals include clothing retailer Vancl.com, bookseller Dangdang.com, Amazon.com Inc.'s joint venture with a Chinese partner, and traditional retailers such as consumer electronics chain Suning Ltd. that have expanded online. Walmart Stores Inc., which operates 340 outlets in China, boosted its online presence last month by expanding its stake in online retailer Yihaodian to a controlling 51 percent.

In addition to its e-commerce platform used by other merchants, 360buy also is China's biggest online retailer, selling consumer electronics and other goods directly to customers.

The source of Singles Day's rise as China's online shopping day is a matter of debate by Chinese commentators and industry analysts.