China's e-commerce binge tests logistics, rakes in sales

Masses of Chinese will be buying online goods during the country's version of Cyber Monday

Packages at the YTO Express shipping center in Shanghai.

Packages at the YTO Express shipping center in Shanghai.

What happens when the world's most populous country goes on an online shopping binge?

E-commerce giant Alibaba Group gave a glimpse of that on Tuesday, when China kicked off its own version of Cyber Monday. The sixth annual Chinese discount event is expected to clog the packaging industry, ring up billions in sales, and fatten the earnings of big-time e-commerce players, along with thousands of participating merchants.

Held on Nov. 11, which is the Singles' Day holiday in China, the sales festival offers consumers deep discounts on products and attracts droves of buyers across the country each year. Alibaba Group, which runs two of China's largest online retail sites, has made a killing off of sales from the event, and processed US$5.8 billion worth in goods during last year's holiday.

The amount is over three times what Cyber Monday -- the Monday after the Thanksgiving holiday -- made in the U.S. last year, according to analytics firm comScore. And it just goes to show that Alibaba, perhaps best known for its $21.8 billion initial public offering on Wall Street, has risen to become one of the world's biggest Internet companies.

For this year's event, research firm IDC expects Alibaba to help sell almost US$8.7 billion worth in goods.

"This is the power of the Internet. This is the power of the Chinese consumer," said Jonathan Lu, CEO of Alibaba Group.

At midnight Tuesday local time, Alibaba began its sales festival and online orders began to pour in. At the end of the first hour, the company had processed about $2 billion in goods, with the number of orders so far reaching 52 million, according to company data.

To show off the data, Alibaba has invited hundreds of journalists to its offices in Hangzhou, China, where it's erected a large display tallying all the orders in real-time. Company executives are confident the display will post big numbers by Tuesday's end.

"E-commerce is still in an early stage in China, and more and more people will do online shopping more frequently," said Daniel Zhang, Alibaba's chief operating officer, speaking with journalists.

The shopping event, however, won't be without challenges. YTO Express, one of China's biggest shipping firms, has hired 30,000 additional workers to deal with the flood of deliveries from Singles' Day, which celebrates people who are single.

YTO Express, which has 72 shipment centers in the country, projects that it will process 17 million packages in the day after the Singles' Day sale, a jump from the 6 million daily average, said company CEO Xiang Feng. Over 70 percent of those packages will come from Alibaba.

"That's our biggest day. A big test to our capacity," he said, while standing outside one of the company's shipping centers in Shanghai. Everyday, the facility processes 800,000 packages, but during the holiday, the figure is expected to reach 2 million, the maximum capacity for the center.

Xiang is hopeful that packages will arrive in a timely manner. Following last year's sale, packages shipped 1,400 miles from Guangzhou to Beijing took about three days, he said.

But others expect a longer wait. Brian Lee is the CEO of handbag retailer Sino Supreme, which has a major virtual storefront on Alibaba's Tmall site and sells through other Chinese e-commerce sites. During Tuesday's sales event, he projects his company will sell 27,000 handbags, a surge from the 200 they typically sell in a day.

The massive sales volume, however, means the company and its shipping partners will have their hands full processing orders. In the past, packages sent out to customers have taken seven to 10 days to arrive in some cases, a major delay from the two days it normally takes, Lee said.

"Customers do understand that you are going through hell, so they kind of have a lower expectation," he added.

Despite the logistical hurdles, the Singles' Day sales festival is a huge money maker for the company, generating about 15 to 20 percent of all the company's online sales for the year. To meet demand, Sino Supreme has stocked up on about 50,000 handbags, Lee said.

Participating merchants through Alibaba's Tmall site are offering discounts of up to 50 percent on their goods. Some merchants such as Android smartphone maker Xiaomi quickly sold out on certain deals within 15 minutes of the start of the sales event.

This year's festival also marks the first time Alibaba has sought to globalize the annual event, offering discounts through its English-language AliExpress site. After the first hour, the U.S. ranked as the festival's fourth-largest market, behind China, Hong Kong and Taiwan.

Join the PC World newsletter!

Error: Please check your email address.

Tags e-commercealibabainternet

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michael Kan

IDG News Service
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?