Alibaba’s Singles Day shopping event is set to end with muted sales and no fanfare

By Casey Hall

SHANGHAI (Reuters) – As Alibaba Group wraps up the world’s biggest online shopping festival on Friday, the operative word seems flat – possibly stagnant sales and flat in tone as the Chinese e-commerce giant didn’t even put on its usual gala show keeps

The Singles Day shopping festival, which despite its name has evolved into a multi-week event, is a key barometer of Chinese retail demand. However, consumer sentiment is at rock bottom – hit hard by China’s tough COVID restrictions and a sharply slowing economy.

Alibaba has also been trying to downplay hype surrounding the event for more than a year as President Xi Jinping increasingly emphasizes “shared prosperity” — a push aimed at eradicating growing wealth inequalities and cracking down on what the Communist Party sees as excessive looks at behavior.

While Alibaba has announced that its Tmall marketplace will offer more than 17 million products, up 3 million from last year, and that a record-breaking 290,000 brands are participating, the festival is expected to have its weakest sales growth ever.

A survey conducted by Bain & Co ahead of the event found that just 24% of respondents planned to spend more this year. In a separate report, US firm Yipit Data said transactions on Alibaba’s Tmall during the Oct. 24-31 pre-sale period, when shoppers can make deposits on items, stagnated compared to last year.

Citi analysts said this week that they conservatively forecast gross merchandise value (GMV) for the event to be between 545 and 560 billion yuan ($75-77 billion), a growth of 0.9% to 3.6%.

“While advertising campaigns have started with a decent upswing in consumer demand over the past week, we are cautious; buying sentiment is likely to remain weak,” Citi’s Alicia Yap wrote, citing disruptions to economic activity due to COVID restrictions and rising job insecurity.

In comparison, GMV increased by 8.5% over the past year and by 26% in 2020. Prior to 2020, the festival was a one-day event.

But Citi predicts that rival e-commerce giant JD.com, which also hosts a Singles Day shopping event, will fare slightly better as it’s strong on consumer electronics and home appliance deals it’s expected to offer stay popular.

JD’s GMV growth is likely to slow to 4.6% to 8.9%, down from 28.6% last year, it said.

GALA WAY

This year marks the first time Alibaba hasn’t hosted a celebrity gala show, which has in the past performed Mariah Carey and Taylor Swift, nor a Nov. 11 event culminating in a countdown to the final GMV tally.

The cancellations were due to COVID curbs, it said, although similar events have been held online for the past two years.

Singles Day has also struggled with the absence of one of its two live streaming mega sales gurus, Viya, who has been offline since being fined for tax evasion. Alibaba also decided not to include the other, Li Jiaqi, in its marketing for its event.

Brands told Reuters that they are realistic about the prospects for this year.

“The platform has definitely tried to cool down expectations from brands,” said Mauro Maggioni, Asia Pacific chief executive of high-end sneaker brand Golden Goose.

Alibaba has said that loyal and VIP customers will be key to the event this year and that it is also focusing on developing loyalty programs for merchants. Alibaba’s membership program has more than 25 million members who spend an average of 57,000 yuan ($8,000) annually on its platforms.

“Alibaba tried to make (the event) less of price cuts,” said Mark Tanner, chief executive of Shanghai-based consulting firm China Skinny.

“But it seems that most consumers, especially in the current environment, just want cheaper goods.”

($1 = 7.2431 Chinese Yuan)

(Reporting by Casey Hall; Editing by Brenda Goh and Edwina Gibbs)

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