Alibaba's Singles Day made e-commerce history - but the numbers also suggest China's economy is cooling down
- Alibaba made e-commerce history on Sunday, recording $30.8 billion in sales in 24 hours at the its Singles Day celebration.
- But the annual growth rate dropped from 39% to 27%, the smallest gain in the event's 10-year history.
- This comes as China, the world's second-largest economy, cools down amid deleveraging and ongoing trade tensions with the US.
- Watch Alibaba trade live.
The Chinese e-commerce giant Alibaba's Singles Day event on Sunday was the biggest online-shopping day in history, but it also signaled a weaker macro environment in China.
Alibaba reported that customers spent $30.8 billion in 24 hours, a significant increase from the $25.3 billion in gross merchandise volume (GMV) Alibaba shoppers spent in 2017. That was almost three times the amount of last year's Black Friday and Cyber Monday sales combined.
Singles Day (November 11) was originally created as a student holiday in China to celebrate single people. Alibaba turned it into an online-shopping festival in 2009, and now it's the world's largest online-shopping festival, outstripping traditional American shopping holidays.
Despite its record-breaking sales, the GMV annual growth rate dropped from 39% to 27%, the smallest rate increase in the event's 10-year history.
"We believe this suggests a weaker macro environment in China, on top of the law of large numbers," Oppenheimer analyst Jason Helfstein said.
And this comes as the world's second-largest economy cools down amid deleveraging and ongoing trade tensions with the US. In the third quarter, China's economy grew at a 6.5% year-over-year rate, the weakest since the financial crisis. At the same time, quarterly nationwide consumer expenditures grew 6.3%, down from 7.5% in 2014.
Economists have attributed the slowdown to economic weakness that was caused in part by a deleveraging campaign started last year that has pushed up companies' borrowing costs. Additionally, the Trump administration has already imposed tariffs on $250 billion worth of Chinese goods, and has tariffs on the remaining $250 billion of goods ready to go.
And Alibaba has felt the pain from China's slowing economic growth. As part of the e-commerce giant's September quarter results, the company posted revenue of $85.1 billion, missing the $86.5 billion that was expected by Wall Street analysts, according to Bloomberg. Alibaba also slashed its fiscal year 2019 revenue guidance by 4% to 6%, citing an uncertain economy.
CEO Daniel Zhang, who will replace founder Jack Ma next September as Alibaba's chairman, recently said that there are many uncertainties in China's economic outlook.
"When people are facing a tough time, they want to change, because they have to survive," Zhang said in an interview with The Information. "If, five years from now, Alibaba doesn't have a new main business, we must have made a very big mistake."
Zhang joined the company's Taobao subsidiary in 2007 and was the architect of its Singles Day event.
Alibaba was down 22% this year.
Now read:
- Alibaba slides ahead of its Singles Day shopping event
- We went to Alibaba's 24-hour shopping extravaganza that is like nothing in America, featuring a Mariah Carey performance and an online-shopping-themed Cirque du Soleil act. Here's what it reveals about the future of retail.
- Alibaba just had the biggest online shopping day of all time, nearly tripling every company's 2017 Black Friday and Cyber Monday sales combined
