Dive Brief:

• During its annual 24-hour Singles Day shopping event, Alibaba on Saturday reported a record $25.3 billion in sales, blasting past last year’s record of $17.8 billion (itself a 32% increase over 2015), according to a company press release.

• This year's event eclipsed 2016’s gross merchandise value (GMV) within just 13 hours and nine minutes, Alibaba said, with the first two hours alone generating nearly $12 billion. The number of delivery orders rose 23% to 812 million, and the first delivery arrived 12 minutes and 18 seconds after midnight.

• Mobile GMV settled through Alipay accounted for 90% of total GMV. The company’s Alibaba Cloud unit processed 325,000 orders per second at the day’s peak, with Alipay processing 1.48 billion total payment transactions, up 41% from 2016.

Dive Insight:

Alibaba has come a long way from its first Singles Day. As CEO Daniel Zhang noted last week, the event initially was an offer to unmarried people "to do some shopping and you won’t feel lonely" and was positioned to bring more awareness to the company’s Taobao Marketplace, taking a cue from Black Friday in the U.S.

"Many people ask me how we came up with this idea, and my honest answer is…survival," he said in an Alizila blog post on Wednesday. "At that time, Taobao Mall was a young business and few people knew what it was. So we wanted to create an event to get people to recognize us and remember us. We looked at Black Friday in the U.S. and said, 'why don’t we have our own Black Friday in China?' November is a good time of year for a sale, but there are no good Chinese festivals in November. So we found a little-known day, on November 11th known as 'Single’s Day.'"

That now looks like a stroke of genius, considering the day’s massive sales. "The numbers are staggering," Sam Cinquegrani, CEO of digital marketing and services company ObjectWave, told Retail Dive in an email, adding that two things stand out in particular. "First, they were inclusive of small retailers, showing the world that digital commerce is a channel available to any retailer, even if the retailer needs to access a marketplace such as Alibaba to sell its goods," he said. "The second is that 90% of sales occurred over mobile!!  We've been saying for a long time that mobile is a digital touchpoint that retailers need to give serious thought to as a channel, and I think this fortifies the point."

The emphasis on mobile is a precursor to where the trend is shifting, Greg Portell, lead partner in the retail and consumer practice of A.T. Kearney, told Retail Dive in an email. "Rather than channels, retailers will start putting the consumer at the center of their strategies in a way that breaks traditional channel boundaries," he said. "Alibaba demonstrates that true consumer-centricity is more powerful than legacy channel conflicts."

Zhang himself said as much on Saturday. "More than $25 billion of GMV in one day is not just a sales figure," he said in a press release emailed to Retail Dive. "It represents the aspiration for quality consumption of the Chinese consumer, and it reflects how merchants and consumers alike have now fully embraced the integration of online and offline retail."

The benefit of Singles Day didn’t just accrue to the retailers of all sizes participating through Alibaba’s marketplaces, however. Rival JD.com and independent retailers that marked the day also saw significant sales, according to  Deborah Weinswig, Fung Global Retail & Technology's managing director.

"We saw many independent retail stores actively participating in 11.11 sales throughout our visit in China," Weinswig said in a report emailed to Retail Dive. "Retailers were using the occasion to promote their products regardless of whether they had a presence on Alibaba’s platforms. JD.com, Alibaba’s closest competitor, also saw a surge in sales on Singles Day."

U.S. brands also benefited thanks to high demand during the event, she said. "The U.S. was the second-most-popular country of origin for imported goods sold during the 11.11 event, after Japan," Weinswig noted. 

The success of a manufactured holiday — copied to a more subdued extent by Amazon with its Prime Day event in July — shows the place of hullabaloo in generating sales, Portell said. "Alibaba’s strategy of using promotions as a way to engage with their suppliers has the potential of redefining trade spending in a way that shifts it back to the original intent of driving sales, rather than a discount strategy," he said. "The success of Singles Day reinforces that sales and hype have a place in retail regardless of online or offline."

Despite the immense growth this year, Singles Day has yet more potential, according to Liz Flora, editor of APAC Research at business intelligence firm L2. "China's e-commerce market can see continued growth from the expanding middle class and consumers' shift to online spending," she said in an email to Retail Dive. "For example, e-commerce's market share of fast-moving consumer goods is increasing while the share for brick-and-mortar hypermarkets and supermarkets is declining."

But some saturation is evident, according to Maggie Gilliam, Director of Executive Education at global intelligence and advisory firm PlanetRetail RNG. "As impressive as the 11.11 figures are, the issue going forward will be how to sustain this kind of growth year-on-year," she said in an email to Retail Dive. "Chinese direct ecommerce sales appear to be slowing, indicating the growth headroom is near to being reached." 

Growth will be found in outlying areas of China and through intense engagement. "It is worth noting that those brands which actively collaborated with Alibaba on various promotional ventures – e.g. Gap, L'Oréal, Nike, Samsung, Uniqlo and Zara, among others – saw the biggest sales returns from the event," Gilliam said.

More consumer goods companies have partnered with both Tmall and JD, and there's a lot more room for luxury brands to go abroad, L2's Flora said. "Both JD.com and Alibaba are competing to expand their lineup of official brand partners in order to maximize growth," Flora noted, saying that L2’s Digital IQ Index: CPG China 2017 from this month found that 97% of home care brands and 100% of personal care brands now have a Tmall store. "Meanwhile, only 24% of luxury brands had an official Tmall shop and 10% had a brand-operated JD.com shop as of June," she said. "This is why we saw Tmall highlight high-end brands at its runway show livestream for Singles Day this year and last."

Much future growth will entail partnerships with social media and chat sites like WeChat, she said. "The JD.com partnership with WeChat can allow for targeted marketing at a scale that it is very difficult to achieve organically on WeChat" because WeChat is a closed 1:1 system, brand posts receive low visibility, she said.

L2 found, for example, that only 1.3% of brand posts achieved between 50,000 and 100,000 views, and only 0.3% reached the maximum of 100,000 in 2017, but that brands' WeChat Moments ads can attract millions of views and link directly to JD.com campaigns.