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Alibaba's Singles Day Could Net $45 Billion In Sales

Analysts say the Chinese internet giant's signature shopping event could grow from 17% to as much as 30% over last year.

Chinese tech giant Alibaba's  (BABA) - Get Free Report massive 11.11 Singles Day shopping event could rake in $45 billion in sales or more this year, analysts say, at a time when the retail sector has been put through the wringer and digital sales have been crucial for survival.

This year’s event, which Alibaba began promoting in 2009 as a day for single shoppers to buy themselves gifts online and has since become the world's largest shopping event, included for the first time a "Phase 1" sales period held from Nov. 1 to Nov. 3. The company added this to give smaller brands and new retailers on its platform the chance to get more exposure, and to enhance the experience for consumers. 

Analysts cautioned that because of the change in format and the impact of the global pandemic, sales estimates are more difficult to make and may not be as comparable to previous years' results. 

In 2019, Singles Day notched a record $38.4 billion in sales, up 24.6% from $30.8 billion the previous year. By comparison, Cyber Monday generated $9.4 billion in sales in the U.S. last year, while Black Friday led to $7.4 billion in online sales.  

"If I had to offer a projection, I’d say [this year's Singles Day generates] about $45 billion for the entire shopping festival including Phase 1," said Kevin Carter, founder of the Emerging Markets Internet & Ecommerce ETF, which tracks the performance of publicly traded, emerging market Internet and e-commerce companies. (Carter is also chairman of the ETF's index committee). That would represent a growth of about 17% from 2019.

Youssef Squali, an analyst at Truist, said Singles Day sales have traditionally grown by about 20%-30% each year and that he expected them to grow in the 25%-30% range in 2020, putting the total haul at between $48 billion and $49.92 billion. Squali said that he expects overall sales for the quarter to grow by the same 25% to 30% range. 

"If they grow [Singles Day sales] 30% or more, we will definitely view it as a successful event, but it wouldn't necessarily mean that they would kill it for the entire quarter," Squali noted. 

This year, Alibaba is encouraging global brands to take advantage of the opportunity to reach Chinese consumers online at a time when brick-and-mortar sales have been hurt so significantly by the coronavirus pandemic. 

"This year has a large focus on small and medium-sized global brands and an emphasis on live streaming," said Carter. Live streaming is a practice that's become very popular in China in which an influencer demonstrates a product or service in a live streaming broadcast and can sell it directly to viewers.

American consumer brands such as footwear company All Birds and Michigan vacuum and floor care company Bissell are both participating in Singles Day for the first time. Since April, more than 200 American brands have launched on TMall Global. 

"The China consumer has historically embraced U.S. brands, though the ongoing U.S. trade attacks on China may have lessened their appeal," noted Carter. "However, the China consumer is back, and they are increasingly looking for new high-quality products so I suspect many U.S. brands will have great success this year."

Starting on Oct. 20, brands have been launching new products and exploring new ways to reach consumers who are using this time to put things in their shopping carts for Singles Day.

"They are making these events more global," said Squali. "In the last five years, [they have been] adding a lot of American brands, European luxury brands [and] Japanese brands into China."

Last week, Alibaba posted stronger-than-expected second-quarter earnings on Thursday as core e-commerce revenues jumped by nearly a third following China's easing of coronavirus lockdown restrictions. 

Year to date, shares of Alibaba are up 37%.