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Alibaba Hits $9B Singles' Day Sales; Tops Black Friday '13 - Analyst Blog

Alibaba Group Holding Limited ( BABA ) Singles' Day sales soared 56.5% to $9 billion from $5.75 billion in 2013, thanks to China's burgeoning Internet population and increasing use of mobile devices. The e-Commerce giant has already taken the lead in the race during the first hour of Nov 11 by generating more than $2 billion in sales.

Alibaba Singles' Day Sales, Bigger than Black Friday

Singles' Day - also known as 11/11 - began to be celebrated by the Chinese youth in 2009, which gradually evolved into the world's biggest 24-hour online shopping event.

Alibaba, which heavily promotes Singles' Day, encourages most retailers to give heavy discounts on this day. Additionally, majority of the brands offer special deals on such Hallmark holidays, including Valentine's Day, Singles' Day and Sweetest Day to ensure that shoppers continue to visit their outlets.

Backed by attractive deals and promotions, Alibaba exceeded its own as well as industry tracker IDC's estimates. This year, Alibaba's $9 billion sale not only outshone its own expectation of $8.2 billion or 50 billion yuan but also IDC's estimate of $8.65 billion. According to Alibaba, 43% of sales were generated via mobile devices.

In fact, Alibaba's Singles' Day sales figures were higher than the Black Friday and Cyber Monday 2013 sales figures taken together. Going by ComScore estimates, online sales totaled $1.04 billion on Black Friday, while Cyber Monday online sales were $1.46 billion last year.

To drive its Singles' Day sales, Alibaba had left no stone unturned. The company's business-to-consumer (B2C) online platform - Tmall - solely dedicated to official brand stores and retailers, had recently allowed foreign brands, such as Costco Wholesale Corp. ( COST ) and Tesla Motors, Inc. ( TSLA ) to reach Chinese consumers via its network. Additionally, Alibaba CEO, Jack Ma, ensured that the Singles' Day deals could reach consumers in more than 220 countries this year. While suppliers from more than 20 countries participated in the event, Tmall facilitated transactions from more than 27,000 sellers.

Another key to Alibaba's success is Alipay, a third-party online payment platform, akin to PayPal, which has become the dominant player in the Chinese online payment market over the last few years. Given the exponential increase in smartphones and tablets for making payments, Alibaba is striving to enhance the services of its online payment platform.

To Conclude

The 2014 holiday season has started off on a strong note especially because of the solid Singles' Day sales. However, whether this rally continues till the year-end is something to watch out for. However, we believe e-Commerce will continue to flourish, particularly driven by continuing adoption of smartphones and tablets.

Since Alibaba went public on the New York Stock Exchange (NYSE) in September, its share price has surged more than 73% from its record $25 billion IPO price. Backed by Alibaba's strong dominance in the mobile search market, cross-border expansion and continuous efforts to develop new products, its Singles' Day sales touched new heights, further strengthening its e-Commerce market presence.

Alibaba currently carries a Zacks Rank #3 (Hold). Mercadolibre, Inc. ( MELI ) sporting a Zacks Rank #1 (Strong Buy) is a better-performing stock and worth considering.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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