Alibaba Group Holding Ltd., China’s largest e-commerce company, broke its one-day sales record by more than 80 percent as it heads toward an initial public offering that may be valued higher than Facebook Inc.
Taobao and Tmall, Alibaba’s two main platforms, topped 35 billion yuan ($5.75 billion) in the 24-hour period, surpassing last year’s sales of 19.1 billion yuan, the company said on its official Twitter Inc. account. Yesterday was China’s Singles’ Day, a local twist on Valentine’s Day, and e-commerce firms marked the occasion by flooding the Internet with promotions and fueling demand on China’s biggest online shopping day
“The spectacular growth rate shows the potential for online shopping,” said Ronald Wan, chief China adviser at Asian Capital Holdings Ltd., which has about $100 million of assets under management. “This will boost momentum for Alibaba, give its potential investors confidence and prompt traditional retailers to think hard how to cope with challenges from e-commerce.”
The Hangzhou-based company provides an online marketplace for consumers and businesses to buy and sell everything from Fuji apples to Boeing Co. 737s. Alibaba, which is considering a U.S. listing after talks with Hong Kong’s stock exchange fell apart, has been valued by analysts at as much as $190 billion, compared with Facebook’s $104 billion valuation after its market debut.
The company is moving toward an IPO in the U.S. after talks for a Hong Kong listing broke down following management’s proposal to keep control in a share sale, two people familiar with the matter said in September.
Alibaba’s revenue surged 60 percent to $1.73 billion in the second quarter, according to a presentation released last month by Yahoo! Inc., which owns a stake in Alibaba. Net income attributable to ordinary shareholders more than doubled to $707 million a year earlier. Alibaba’s second-quarter profit is more than double Facebook’s on slightly less revenue.
Tmall’s vendors, starting midnight, began cutting prices by 50 percent or more on selected products from 20,000 Chinese and international merchants, including Gap Inc. and Steven Madden Ltd. Surging Internet purchases show Chinese demand is shifting away from bricks-and-mortar outlets. The proportion of retail sales made online last year jumped to 6.3 percent from 4.3 percent a year earlier, according to data compiled by Bloomberg.
The surge in Alibaba’s transactions “was driven by huge discounts, it remains to be seen if the growth can sustain without huge sale,” Wan said.
U.S. consumers last year spent $1.46 billion on Cyber Monday, or the Monday after Thanksgiving, when e-retailers offer big promotions.
Smaller rival 360buy Jingdong Inc. began offering half-price Pampers diapers from Nov. 1 and pledged to slice as much as 70 percent off items including slimming belts and facial moisturizers, according to its website. Suning Commerce Group Co., an Internet retailer that started out selling electrical appliances, has been running ads for online sales beginning Nov. 8 with the slogan: “Four days, four nights, shop non-stop.”
Suning broke one-day sales record yesterday with growth from some products including electronics and household appliances surging by three- to fourfold, it said in a statement today. Intime Retail Group Co., a Beijing-based department store operator, said yesterday’s one-day sales on Tmall.com were six times more than a year ago.
360buy had more than $1.6 billion in revenue during its promotional period that started Nov. 1, it said in a statement.
Alibaba doesn’t sell merchandise itself. Instead, it runs platforms including Taobao and Tmall that connect retail brands with consumers, a cross between Amazon.com Inc. and EBay Inc. It makes most of its sales from commissions and advertising.
‘Singles’ Day’ was invented by students in the 1990s, according to the Communist Party-owned People’s Daily, which said the date (11-11) is reminiscent of the Chinese phrase -- “bare branches -- for bachelors and spinsters.”
Alibaba’s Tmall site began marketing the day as its biggest sales event in 2009, rivals jumped on board, and the day turned from an opportunity to seek out a partner -- or celebrate singledom -- into an online shopping bonanza.
“The discounts are so huge it was definitely worth the wait,” said Cindy Wang, a 34-year-old Internet executive in Shanghai, who this year held back on buying 3,000 yuan of clothing and bedding till midnight on Nov. 11. “I can’t remember the last time I bought a big item in a departmental store.”
— With assistance by Liza Lin, Lulu Chen, and Jasmine Wang