(Chinese Version)

According to public data, the transaction volume on all major Chinese online retailing sites soared to CYN 122.9 billion during this year's Singles’ Day, an increase of 52.7% year-on-year. At the same time, the number of parcels on all major sites jumped by 65.7% and reached a record high of 678 million. However, the transaction volume on Alibaba’s online retailing sites, including Taobao and Tmall, exceeded CYN 91.2 billion, accounting for an amazing 74% of the total.

During last year’s Singles’ Day, Alibaba already demonstrated to the world the spending power of Chinese consumers. Things became even crazier during this year’s Singles’ Day. To some degree, the Singles’ Day has already become a shopping day, or even carnival for many Chinese. Alibaba even held a special Tmall Gala at Water Cube to add to the festival atmosphere.

However, while Alibaba’s stock price skyrocketed to 120 US dollars following last year’s Singles Day, American investors seemed not to be willing to respond to Alibaba’s another record high this time, even though NYSE was invited to ring the opening bell for Alibaba’s global shopping carnival. On the contrary, the stock price of Alibaba and JD dropped by 1.94% and 1.13% respectively as of yesterday’s close.

As a matter of fact, the stock price of Alibaba has been gradually declining since this year. After reaching a nadir this September (57.2 US dollars), its stock price has rebounded steadily. Yet, the stock price began to drop again around this year’s Singles’ Day. Likewise, this rule also applied to Alibaba’s greatest “enemy” JD.

How come? Some reports suggested that: on the one hand, American investors had actually already demonstrated their confidence in Alibaba’s Singles’ Day shopping festival, as can be seen in a slight increase of Alibaba’s stock price before the carnival; on the other hand, some American investors have already begun to doubt if the festival would come at the expense of low spending power of Chinese consumers during the rest of the year, while other investors seemed to be much more worried if Alibaba was selling fake products to consumers. An analyst further explained that:

“The major reason why investors begin to cast doubt on the effect of Singles’ Day shopping festival is that they worried that this world’s hugest, biggest and craziest shopping day of the year might undermine both consumers’ spending power and business owners’ marketing ability.”

Indeed, the large-scale discount activities on Singles’ Day might interrupt some consumers’ purchase plan before and after the shopping festival, other consumers who shopped online slightly before the “big day” might have to wait for extra time to have their goods delivered to them, and still others might shop irrationally and get overdrawn, thus returning most of their goods, regretfully.

Business owners were also forced to seize the opportunity on Singles’ Day and do everything they could, including preparing enough goods before the big day, placing fake orders on the big day, only to attract consumers’ attention and sell as many goods as possible on the big day.

Li Guoqing, the founder of another major Chinese online retailing platform Dangdang.com, once stated to the media, saying that: “It has already become a common practice for business owners to place fake orders on online retailing platforms, since both these platforms and consumers are willing to rank a brand based on its sales.”

He was speaking the truth. This April, some researchers revealed in detail how business owners on Taobao placed fake orders. In the same month, Alibaba was fined for the unscrupulous cheating behaviors during last year’s Singles’ Day, which even led Jack Ma, the founder and CEO of Alibaba to declare that Alibaba would stop recruiting new members before the end of 2015. Coincidently, some analysts suggested that the growth of active users on Alibaba’s online retailing platforms had slowed down and reached its nadir during the first quarter of 2015.

“Since some online retailing platforms would lower the price a great deal to compete with other platforms in the price battle, we would even buy back the products we provided to these platforms with a lower price and then sold them with a regular price on traditional sales channels,” a senior sales personnel of a traditional brand once suggested, “We are almost forced to place fake orders since many consumers prefer to buy products with higher sales.”

Nevertheless, most business owners seemed not to be making much profit out of the shopping spree on every Singles’ Day. For one thing, they had to spend much money in placing fake orders and promoting themselves; for another, they had to lower the price a lot and make profit merely by large sales, which could be highly risky when taken into consideration the high return rate. As a matter of fact, most business owners ended up losing money.

I want to say a few more words about the return rate here. According to statistics from ChinaIRN, the average return rate reached 25% in 2013, and even higher for some business owners (over 40%). After last year’s Singles’ Day shopping festival, some media revealed that the return rate for HSTYLE and Jack Jones, the top clothing brand for women and men respectively, hit 64.09% and 38.25%. Quite amazing, isn’t it?

It was evident that Alibaba had never dared to reveal the return rate or deduct the returned products from the total sales for the past six Singles Days and also for the recent Singles’ Day.

Another issue foreign investors might be worrying about was if Alibaba was selling fake products to consumers. They have almost lost faith in Alibaba due to the large number of reports over this issue. Last April, NetNames, the global market leader in the outsourced management of companies’ key online intellectual property assets, estimated that 20% to 80% of products sold on Taobao were fake ones. This January, State Administration of Industry & Commerce of the PRC accused Alibaba of putting no adequate effort in cracking down on behaviors such as selling fake products to consumers in a report. However, now that Alibaba is desperately to expand its business overseas, a growing number of American NGOs and global brands are keeping a close eye on Alibaba’s related efforts, fearing that fake products would spread to the rest of the world via Alibaba’s online retailing platforms.

However, Jack Ma seemed to see fake products from another perspective. For him, no business model can avoid fake products. He even felt wronged by such criticism, but declared that Alibaba would not rebut the charge and do everything they could to limit such behavior. Recently, Kering SA filed a lawsuit against Alibaba in May in New York’s Federal Court, accusing the Chinese e-commerce giant of “turning a blind eye” to counterfeit goods being sold on its online shopping platform Taobao and not stopping them. Jack Ma responded to the charge, saying that Alibaba would “rather lose than settle” Gucci counterfeit claim. In a TV interview with Bloomberg, he spoke quite frankly:

“No matter our investors love or hate us, we have to love our investors, since nobody can ever stop people from hating them. What we can only do is cater to the needs of our users and improve the performance of our company to the fullest. Some people hate us simply because they hate the rise of China’s economy. Alibaba is not going to run for merely a year, but for, let’s say, 102 years. We have already gone through the past 16 years, but we still have 86 years to prove ourselves.”

On the morning of November 12th 2015, Jack Ma told the media that: “Singles’ Day shopping festival activated only a tiny part of China’s domestic demand, and has still a long way to go to fully unleash the great potential of the Chinese market.” He added that: “Alibaba will hold Singles’ Day shopping festival for at least 100 years, and make Singles’ Day a shopping festival for not only Chinese consumers but also people around the world. The festival will last even longer than Alibaba itself.”

In conclusion, the record sales during the just past Singles’ Day seemed to be the victory of merely Jack Ma and his Alibaba. Nobody can say for sure what benefits Singles’ Day shopping festival can bring in the future.

[The article is published and edited with authorization from the author @TMTpost-Chinese, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.