China's 'Singles Day' online shopping bonanza breaks record with $17B US in sales

Alibaba Group Holding Ltd Singles' Day festival posted a record 120.7 billion yuan ($17.73 billion US) worth of sales on Friday, though the gala shopping day saw growth slow as Chinese shoppers searched for deeper discounts and lower pricetags.

Amid fanfare and celebrity razzmatazz, sales on Alibaba's platforms had raced to a billion dollars in less than five minutes and broke past last year's total with almost nine hours of the day-long shopping gala to spare.

• From 2014: 'Singles Day' nets $9B in sales in 1 day

The final total marked a 32 per cent rise from 2015, but growth was significantly lower than the 60 per cent increase last year, a reflection of more caution among shoppers who opted to spend less money on each purchase than in previous years.

The 24-hour event, held annually on Nov. 11, offers a benchmark forAlibaba'sperformance and an insight into China's swing to online shopping, especially viasmartphones.AlibabaChairman Jack Ma played down the importance of the final figure in a speech shortly before midnight, echoing other executives who spoke during the day.

"(Singles' Day) is not about a number only," said Ma, adding that the gross merchandise value (GMV) metric was "misleading" because it undervalued the company's wider ecosystem. GMV refers to the value of goods sold by vendors throughAlibaba'splatforms.

Alibabamakes money through advertising and charging vendors a proportion of their sales. "When volumes started to grow a little less fast I actually became more relaxed," said Ma, citing the challenge of handling such a large number of orders. "We don't want to collapse the entire logistics system."

Mobile market growing

The discount shopping day, also known as "Double 11", still shifts more goods than the Black Friday and Cyber Monday sales days in the United States combined. The slowdown in sales growth comes amid a more saturated domestic online retail market, a weaker economy and sluggish personal income growth hitting consumers' wallets. A strong U.S. dollar also hit the headline sales figure in dollar terms.

After a beefed-up marketing push over the last month with fashion shows and virtual reality games sales officially opened at midnight, releasing a wave of pre-orders that shoppers had placed ahead of the event. Sports stars DavidBeckhamand Kobe Bryant attended the countdown, though headline act Katy Perry pulled out last minute citing a family issue.

At mid-afternoon on Friday a live sales tracker at anAlibabaevent in the southern Chinese city ofShenzhenticked passed the 2015yuantotal, ensuring the day set a record. The rise of Singles' Day reflects how China's consumers, armed withsmartphones, are racing online to shop to the detriment of bricks and mortar stores. Around 82 per cent of total sales were via mobile devices, up strongly from last year.

Average purchase is smaller

The day itself is a double-edged sword for many: Couriers and packaging firms say low prices and steep competition mean profit margins are slim despite large sales volumes. Retailers are also starting to feel the pinch: The cost per order shrank to 184yuan($27 US) from approximately 194yuanin 2015, according to the unaudited metrics released byAlibaba.

Cut-throat competition for customers has also caused concern over false advertising and massaged statistics. This week China's business regulator advised mainland online shopping platforms to guard against suspect sales tactics. In May this year,Alibabasaid the U.S. Securities and Exchange Commission (SEC) was looking into how it reports its Singles' Day figures.

Alibabasaid at the time it was cooperating with the authorities, and that the SEC advised it the investigation should not be seen as an indication the company had violated federal securities laws.Alibabadeclined to comment on the SEC probe on Friday.

The company has also faced criticism for its failure to address selling of counterfeit goods on its online marketplace. During his speech Jack Ma called on authorities to confiscatelicencesfrom manufacturers making counterfeit products. "Someone has to remove theirlicences, someone has to close them down," said Ma, adding thatAlibabaitself was "not law enforcement".

Alibabais not the only retailer to mark Nov. 11 with a massive sales drive. China's no. 2 e-commerce player, JD.com Inc , and many others also offer discount deals on the day.