Alibaba's massive 11.11 Singles Day shopping holiday is around the corner, and early signs suggest it's poised to be another big one.
Since it was launched in 2009, initially as a day for single shoppers to buy themselves gifts, Singles Day has grown steadily both in terms of sales volume and its footprint across the broader Alibaba and retail ecosystems. In 2018, Alibaba sold $30.8 billion worth of goods during 11.11, up from $25.4 billion in 2017 and $17.9 billion the year prior.
This year, sales are very likely to grow again. Although Alibaba doesn't give sales projections for the event, a spokesperson told TheStreet that early signs point to continued strength. The number of 11.11 pre-sales -- in which buyers can add items to their cart and schedule a purchase during the event -- are double what they were last year, Alibaba said. In total, more than 500 million shoppers are expected to take part in the event this year.
"According to the management, currently only 25% of BABA's China retail marketplace consumers used its local consumer services implying still low penetration and ample growth potential," wrote Benchmark analyst Fawne Jiang in a recent note. "We believe the cross-selling should strengthen BABA's value propositions for consumers and offer additional growth legs for the Company in the longer term."
This year's 11.11 festival will see a greater volume and range of brands participating in the event. More than 200,000 brands will participate in this year's Singles Day, compared to approximately 180,000 brands last year. And Alibaba is focused on making Singles Day attractive to global brands as a gateway to the Chinese market, which comprise the vast majority of Alibaba's sales.
Electronics, cosmetics and apparel are perennial favorites of Singles' Day shoppers, and this year will likely be no different. Apple's (AAPL) - Get Report iPhone 11 and Estée Lauder (EL) - Get Report products are expected to be among the strongest sellers. In addition to acting as a gateway to Chinese consumers, Alibaba's e-commerce sites also serve as a window into preferences in that market. Alibaba cited examples of brands using insights gleaned from Singles Day sales to develop new products specifically for the Chinese market, such as a Snickers bar flavored with a spice popular in China.
For investors, Singles Day gives a look into what efforts Alibaba is making to ensure that its core e-commerce business, which comprises roughly 86% of its overall revenue, continues to see strong growth in the seasonally significant fourth quarter.
Dampened by trade tensions and a lagging Chinese economy, Singles Day sales growth decelerated between 2017 and 2018 -- and Alibaba wound up posting its lowest revenue growth in years that quarter, at 41% growth compared to 65% in the prior quarter.
This year, Alibaba is focusing on selling more goods and services in lower-tier and less-developed cities in China, which make up 70% of Alibaba's new annual active consumers, the company said. As another avenue for growth, it's also focused on encouraging existing customers to buy more products and services across its different platforms.
Underscoring its global focus, U.S. pop star Taylor Swift plans to perform at its countdown gala ahead of the Nov. 11 opening of sales. Other celebrities such as Kim Kardashian will also participate in sales initiatives during Singles Day.
Although Singles Day sales are overwhelmingly to consumers in China, Alibaba is also taking steps to expand into other countries. For the first time this year, AliExpress invited vendors in Russia, Spain, Italy and Turkey to participate in Singles Day.
Alibaba shares were up 0.3% to $187.20 on Friday and have risen about 37% so far this year.