China’s Singles Day breaks online retail sales record

What started out as a marketing ploy for Alibaba to promote its website in 2009, Singles Day, November 11, has become an online shopping phenomenon that has surpassed that of the US’ Cyber Monday. This year, it appears a record was broken as Alibaba noted sales of $5.75bn; almost double that of last year’s sales. In fact, Alibaba estimates that when all of China’s e-retailers are counted for, sales could reach $8.2bn. To put this in perspective, in 2012, Cyber Monday broke its own record from the previous year with a recorded $1.5bn in sales.

According to China’s State Post Bureau, for the week of Singles Day, (November 11-16), it is estimated that post offices and express shipping companies will deliver more than 323m packages. To avoid the highly publicised delivery delays from last year, the China Express Association notes that China’s thirteen major couriers were to add about 4,000 temporary vehicles to their regular fleet and also an additional increase in 30% in air freight capacity to deal with the volume.

Among the preparations the courier companies have undertaken includes that of SF Express which took receipt of a B757 air freighter at the end of last month in part to ensure capacity for the holiday. Also, Shentong Express (STO Express) invested more than $3.3m to build a 10,000 sq m warehouse that could handle more than half a million parcels. It also hired an additional 1,000 staff and 300 vehicles were added to its fleet.

China’s express and small parcel industry continues to increase as online retail sales rise. For the first nine months of this year, online retail sales increased 35% to $212.4bn according to China’s Ministry of Commerce. As such, based on data from China’s post bureau, combined, the express and small parcel industry reported revenue for the first nine months increasing slightly over 27% to about $30.3bn compared to the same period for 2012. However, while many such providers have enjoyed good increases in revenue, one may wonder the actual profitability of these providers due to investments made in their supply chain operations. While the investments are needed to reduce logistics bottlenecks, the possible lack of or low profitability may create opportunities in consolidation among the express and small parcel providers.

Chinese express and small parcel providers’ logistics networks will continue to be tested through the end of year. As Chinese e-retailers close the books on Singles Day 2013, preparations are already underway for another marketing scheme to promote online retail – Double 12 (December 12). Along with the traditional November-December holiday season, there will likely be additional strong increases in sales and thus packages.