Chinese e-commerce giant Alibaba is again celebrating record breaking sales for Singles’ Day – an annual online shopping fiesta that in six years has gone from a virtual non-event to a retail blockbuster phenomenon.

In just 24 hours it says it racked up US$18 billion in sales – up from 32 per cent on the US$14.3 billion spent on its Tmall and Taobao sites in 2015. To put that in perspective, the largest sales days in the US, Black Friday and Cyber Monday, saw combined sales of a comparatively paltry US$5.8 billion last year.

Although other Chinese e-retailers like have jumped on the bandwagon, Alibaba is the driving force behind the Singles’ Day phenomenon, rebranding the November 11 event “The 11/11 Global Shopping Festival”.

Extending the scope and duration of Singles’ Day promotions reflects both China’s economic reality and New York-listed Alibaba’s ambition.

From sales of just a few million dollars in 2009, Singles’ Day now dominates the Chinese retail calendar and is without question the largest shopping event in the world.

To whip up excitement this year Alibaba hired Hollywood producer David Hill, known for producing The Oscars and American Idol, to manage its televised live countdown show. Adding to the razzmatazz Alibaba it flew in celebrities like David Beckham, Kobe Bryant and the band One Republic among others and it has signed up luxury brands such as Burberry, Guerlain and Maserati.

It also announced that it was extending the promotional period from 24 hours to 24 days, and for the first time it expanded the promotion to shoppers in Hong Kong and Taiwan.

Market saturation staff at Northeast China based Gu'an warehouse distribution facility

Extending the scope and duration of Singles’ Day promotions reflects both China’s economic reality and New York-listed Alibaba’s ambition.

Growth in retail spending in China is sluggish, despite efforts by the government to shift from a manufacturing and investment-driven economy into a consumer-driven one.

At the same time, with large parts of the Chinese domestic market reaching saturation Alibaba is eager to raise its profile overseas as it diversifies into other businesses like entertainment and cloud computing services.

To fund that growth Jack Ma, Alibaba’s billionaire founder and chairman, has big plans to expand the business of cross border e-commerce, reinventing and digitizing retail beyond China, first in Asia and then to the rest of the world.

Ma has set a goal of reaching two billion consumers. The recent purchase of Singapore online grocer Redmart by Alibaba-controlled Lazada is just another step on that front.

Add to that recent reports that US-based Amazon is set to launch in Singapore early next year and the stage is set for two behemoths of e-commerce to go head-to-head for the first time.

As a listed firm, Alibaba needs to keep delivering strong growth headlines. For the past six years turnover from Singles’ Day has seen exponential growth – up 60 per cent in 2014 and 54 per cent last year.

But producing record-smashing figures year after year is simply not sustainable – at least not based on the Chinese market China alone. Hence Ma’s ambitions to take the success of Singles’ Day in China to a global level.

This year the event will be open to consumers in Taiwan and Hong Kong for the first time. Next year it is expected to reach out to include South-East Asia, with plans following for the quick expansion into other developing and Western markets.

Postponed purchases

Yet there is also a concern that Singles’ Day could be a victim of its own success.

The huge spike in sales on just one day in the year, creates a significant distortion. Indeed it is estimated that recent Singles’ Days events have accounted for 20-30 per cent of all sales for the whole year.

A large part of this is because consumers, who have become used to the huge discounts the event offers, postpone their purchases in anticipation of lower prices. They stack up their online shopping baskets in the months leading up to Singles’ Day but delay proceeding to the checkout until the expected price drops appear

For retailers and the logistics teams that get the goods to the customer, that presents major challenges. Inventory must be stacked up and extra temporary staff must be hired to cope with the rush.

That may create organisational headaches and extra costs, but the reality for most retailers is that they cannot afford to not be involved with Singles’ Day. In just six years the event has become such an institution that to not be part of it is virtual business suicide.