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China's e-commerce binge tests logistics, rakes in sales

Michael Kan | Nov. 11, 2014
Masses of Chinese will be buying online goods during the country's version of Cyber Monday.

alibaba
Alibaba is tracking the value of goods it sells during the Singles' Day holiday in China. Credit: Michael Kan/IDG News Service

What happens when the world's most populous country goes on an online shopping binge?

E-commerce giant Alibaba Group gave a glimpse of that on Tuesday, when China kicked off its own version of Cyber Monday. The sixth annual Chinese discount event is expected to clog the packaging industry, ring up billions in sales, and fatten the earnings of big-time e-commerce players, along with thousands of participating merchants.

Held on Nov. 11, which is the Singles' Day holiday in China, the sales festival offers consumers deep discounts on products and attracts droves of buyers across the country each year. Alibaba Group, which runs two of China's largest online retail sites, has made a killing off of sales from the event, and processed US$5.8 billion worth in goods during last year's holiday.

The amount is over three times what Cyber Monday -- the Monday after the Thanksgiving holiday -- made in the U.S. last year, according to analytics firm comScore. And it just goes to show that Alibaba, perhaps best known for its $21.8 billion initial public offering on Wall Street, has risen to become one of the world's biggest Internet companies.

For this year's event, research firm IDC expects Alibaba to help sell almost US$8.7 billion worth in goods.

"This is the power of the Internet. This is the power of the Chinese consumer," said Jonathan Lu, CEO of Alibaba Group.

At midnight Tuesday local time, Alibaba began its sales festival and online orders began to pour in. At the end of the first hour, the company had processed about $2 billion in goods, with the number of orders so far reaching 52 million, according to company data.

To show off the data, Alibaba has invited hundreds of journalists to its offices in Hangzhou, China, where it's erected a large display tallying all the orders in real-time. Company executives are confident the display will post big numbers by Tuesday's end.

"E-commerce is still in an early stage in China, and more and more people will do online shopping more frequently," said Daniel Zhang, Alibaba's chief operating officer, speaking with journalists.

The shopping event, however, won't be without challenges. YTO Express, one of China's biggest shipping firms, has hired 30,000 additional workers to deal with the flood of deliveries from Singles' Day, which celebrates people who are single.

YTO Express, which has 72 shipment centers in the country, projects that it will process 17 million packages in the day after the Singles' Day sale, a jump from the 6 million daily average, said company CEO Xiang Feng. Over 70 percent of those packages will come from Alibaba.

 

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