Alibaba and JD.com Are Set to Duke It Out on Singles Day

Chinese e-commerce giants Alibaba and JD.com are both vying to capitalize on the country's biggest sales day of the year.
By Rebecca Borison ,

Chinese e-commerce giants Alibaba (BABA) - Get Report and JD.com (JD) - Get Report are gearing up for the country's biggest sales day of the year -- Singles Day.

What is today one of the largest sales events in the world first started out as an anti-Valentine's Day of sorts, created by a group of students at Nanjing University in the 1990s. The four 1s in 11/11 -- Singles Day takes place on Nov. 11 -- symbolize singles, so single people are encouraged to celebrate the day by buying things for themselves.

The day took off, and like any holiday, became a ripe opportunity for brands. In 2009, Alibaba took advantage of the day and helped turn it into a huge commercial event. Last year, $9.3 billion worth of orders were placed on Alibaba on Singles Day, more than three times the amount spent online in total by U.S. consumers on Cyber Monday in 2014. And this year, Alibaba may surpass the $10 billion mark. 

SunTrust analyst Bob Peck estimates that Alibaba will generate $12 billion in gross merchandise volume, or GMV, on Nov. 11.

And Alibaba's not the only one that will benefit from the big day. JD.com, a longtime rival of Alibaba, is also capitalizing on Singles Day this year with its own sales and promotions. While JD.com did not disclose how much GMV last year's Singles Day generated for the company, it did say that GMV more than doubled that of the previous year's Singles Day, and that the marketplace placed more than 14 million orders during the event, up 120% from 2013's Singles Day.

Neither company has given sales guidance for the day, but both are expecting huge numbers.

"Early results suggest many of our top international general merchandise brands will see increases of more than 100% volume versus last year," a JD.com spokesperson said in an email.

Some of the key themes that factor into these high expectations are increased cross-border efforts and omnichannel sales.

Both Alibaba and JD.com have been fighting, often fiercely, for international brands to participate in their Singles Day sales. JD recently filed a complaint with a Chinese regulator claiming that Alibaba was pressuring brands not to participate in JD's Singles Day promotion.

Alibaba denied JD's assertion, saying that "JD is panicking because they're losing."

Rivalry aside, both companies are likely to benefit greatly from Singles Day.

"No company can own a day," said Wedbush analyst Gil Luria. "That's why JD should have a very successful day as well. As of last year it was very much an Alibaba event. I would expect starting this year for it to be a broader event than just Alibaba."

China's postal service estimates that 760 million packages will be generated by online retailers' Singles Day sales. Last year the day generated 540 million packages.

Alibaba got a head start with Singles Day, so its relationship to the day may be more established, but that also means JD has more room for growth.

"Given that JD's a little newer and growing off a smaller base, I suspect absolute growth numbers will outpace Alibaba, but both will have very strong results," said Morningstar analyst RJ Hottovy.

And in terms of the growth Alibaba can expect from Singles Day, Luria's expectations are a bit more muted than Peck's. While he thinks the event will still be big this year, he believes last year will be Alibaba's peak year for Singles Day in terms of growth.

"Based on some of the subsequent reports, it seems like [Alibaba] drove a lot of the brushing activity that may have inflated volumes at the time," he said, referring to the practice of sellers using fake customers to inflate sales numbers and improve their search listings.

"I wouldn't expect [Singles Day] to be quite as spectacular and I wouldn't expect them to match the 60% growth they saw last year, but it'll still be a global event," Luria said.

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