Surpassing all it’s previous records, the Chinese conglomerate Alibaba, in its latest annual Single Day event, 11.11 Global Shopping Festival, has clocked $30.8 billion in Gross Merchandise Value (GMV).
The company had sold products worth $1 billion within the first minute and 25 seconds of this 24 hour event and had hit the $10 billion mark in 1 hour and 48 seconds (5 minutes 21 seconds ahead of last year). It had crossed its previous year’s 812 million order mark and $25.3 billion GMV record by 5:34 p.m. SIN/HK.
Measuring in the Chinese Yuan, the Shanghai-based giant made RMB 213.5 billion, crossing the RMB 200 billion mark 90 minutes before the end of the sale. As compared to previous year’s RMB 168.2 billion figure, this was a 27 per cent YoY rise in GMV, however, this was still a smaller magnitude growth considering the GMV grew 39 per cent YoY in 2017.
The factors contributing to this overwhelming sales figure included Alibaba’s acquisition of Lazada that organised its first 11.11 Sales festival in six Southeast Asian countries, Ele.me providing delivery for some Starbucks stores across eleven Chinese cities, offering of huge discounts on its e-commerce website Tmall and much more.
Around 180,000 brands participated in this sale (approximately 40,000 more than last year) including Huggies, Dyson, Apple, Samsung, Xiaomi, Sony, and Phillips. The most popular categories among the customers were mobile phones, women’s fashion, diapers, computer accessories, and audio equipment.
Why should we care?
As one of the fastest growing e-commerce markets in the world, India needs to learn from these figures on multiple levels. For these figures tell a story larger than India’s overall annual GMV in the e-tail sector.
Starting with the direct comparison, let’s look at the market leaders Flipkart, Amazon, and most importantly Paytm Mall. Kalyan Krishnamurthy led Flipkart, in its latest BBD clocked $1-1.1 billion in GMV in 5 days; while Amazon, in 6 days, could manage an $800 million sales figure. Paytm Mall, Vijay Shekhar Sharma’s e-commerce arm in which Alibaba itself is the largest investor, sold merely 12 million orders in its Maha Cashback Sale.
Flipkart and Myntra’s current annual GMV stands at $7.5 billion, while Amazon India’s relative figure is $5 billion. Paytm Mall, however, claims an annual GMV run rate of $3 billion as of February this year, targeting $10 billion by March next year.
While this reflects how the largest e-tailers of India have a huge ground to cover in future individually, India’s overall annual online retail sales figures and estimations actually puts in perspective the struggle Indian e-commerce startups have yet to go through before actualizing the potential the market claims to possess.
As we can see in the picture above, this data by Indian Brand Equity Foundation (IBEF), shows how India’s last year’s annual GMV in online retail, $17.8 billion, was $7.2 billion less than Alibaba’s $25.3 billion total sales figure in the one single day of 11.11 Global Shopping Festival.
The online retail sale estimate for 2018 by IBEF, $32.7 billion than the Jack Ma led company’s Single Day Sale GMV $30.8 billion this year.
As per Alibaba’s top executives themselves, the challenge in Indian market lies in the fragmentation. The country has only realised one-tenth of its potential in the e-commerce market for now and is way behind China’s trillion dollar e-commerce industry.
The crux of this matter, according to Alibaba reps, lies in the fact that the country has different states with different regulations and a not-very-unified market that cannot thrive on traditional models like B2C or C2C. This further elaborates the companies favour of Paytm Mall, as their strategy is to capture the Indian market via payments.
In reality, Paytm Mall is still struggling to compete with the giants Flipkart and Amazon, and Alibaba’s strategy of investing in the e-commerce arm of Paytm is yet to fructify.
The entire Indian internet and startup economy is looking upon the next 500 million users as their target market to beat the competition and attain dominance. For e-commerce, the challenge is tackling the fragmentation, as well as the problems in logistics, payments, and building a regular customer base.
But most importantly, the up and coming internet generation belongs to tier II to tier IV cities, and this being a tricky market to crack, the task requires innovation and investment.
It might not be possible for Indian e-com players to copy Alibaba’s growth mechanisms, but there’s still a lot to learn in terms of innovation, strategising, and expansion to achieve overwhelming growth.