Alibaba rakes in $9.3B as Chinese splurge online during Singles' Day

In a monumental e-commerce splurge, Chinese consumers bought a whopping $9.3 billion in goods on Alibaba Group's sites on Tuesday, as part of a major online shopping festival that took the country's Internet market by storm.

Local e-commerce giant Alibaba tallied the final figure Wednesday at midnight local time for what's known as the Singles' Day holiday in China, an annual event where online retail sites in the country offer big discounts on products.

The $9.3 billion (57.1 billion yuan) is a jump from the $5.8 billion Alibaba raked in a year ago during last year's event, and underscores how China has become a major market for online goods. Cyber Monday, in contrast, only brought in $1.7 billion in online spending from desktop users last year, according to analytics firm comScore.

"You're seeing the unleashing of the consumption power of the Chinese consumer," said Alibaba vice chairman Joe Tsai on Tuesday.

Here are some takeaways from Alibaba, which runs two of China's largest online retail sites, Tmall and Taobao Marketplace.

What did people buy?

Tmall acts as a giant online shopping mall for merchants ranging from Apple to Gap. But on Tuesday, Chinese consumers seemed to flock more to the site's domestic brands.

The most popular merchant on the Tmall site was Xiaomi, a local maker of inexpensive Android handsets that has quickly risen to become China's largest smartphone vendor. Within 15 minutes after midnight on Tuesday, Xiaomi had already sold out certain deals for its products.

In second place was Huawei, another domestic smartphone and tablet vendor, and in third was Haier, a Chinese maker of household appliances. But consumers also bought from foreign brands, including Japanese clothing maker Uniqlo, which was the fifth biggest selling merchant on Tmall, and Danish clothing brand Jack & Jones, which was ranked seventh.

"I think most of the products have sold out," said Jack Ma, Alibaba founder and chairman, while speaking with journalists on Tuesday.

The rise of mobile

China is the world's biggest smartphone market, and on Tuesday omore than 42 percent of all online orders were placed via a mobile device, sharply up from last year when 21 percent of all orders came from mobile.

The growth in mobile likely helped Alibaba grow its Singles' Day sales to $9.3 billion. The company has been adding mobile services and apps, and even has its own mobile operating system, and those efforts seem to be paying off.

At the end of this year's third quarter, Alibaba had 217 million monthly active mobile users, which helped grow the company's revenue in the period.

In the case of Singles' Day, a flood of orders initially came from consumers waiting up until midnight to buy products with their mobile devices, said Alibaba chief operating officer Daniel Zhang.

Going rural

Many of Alibaba's consumers on Tuesday came from China's better developed urban areas including Shanghai, Beijing, and the coastal provinces of Guangdong and Zhejiang. But to keep the company's growth robust, Alibaba has been targeting the country's rural areas, where many Chinese are still offline. However, that's starting to change with the arrival of more smartphones in rural areas.

Tsai said he was sent a photo of a rural family crowding around a package just delivered to them. "They're viewing this as if it's a newborn baby come to life," he added.

Chinese merchants living in rural areas are also making goods, and Alibaba wants to help them reach consumers in China's urban centers, and even outside the country, company executives said.

International expansion

This year was the first time Alibaba extended its Singles' Day event to markets outside of China, by offering discounted products through its English-language AliExpress site. As part of that promotion, free international shipping was offered for certain products to buyers based in Brazil, Spain and Russia.

At the end of this year's Singles' Day event, neighboring Hong Kong ranked as Alibaba's biggest market outside of China, followed by Russia and then the U.S., according to the company. In total, buyers in 217 different markets participated in Alibaba's sales festival.

Copyright © 2014 IDG Communications, Inc.

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