“i gles’ Da 6 Results and review - Alibaba and JD.com

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12 November 2016

Teresa Lam, Christy Li, Renne Chan

Asia Distribution and Retail

Key results

Alibaba reported 120.7 billion yuan (US$ 17.8

billion) in GMV compared to the 91 billion yuan

(US$ 14.3 billion) last year. Sales growth was 32%,

do f o last ea ’s %.

2

82% of total GMV (98.97 billion yuan, or

US$ 14.6 billion) were made via mobile devices,

a substantial improvement relative to last year's

68.7%.

Globalization remained the key theme. 235

countries participated this year, up from 232 in

2015.

657 million logistics orders were generated in the

24-hour period.

Ant Financial handled a record of 1.04 billion

transactions via Alipay, up 46% yoy from 710

million in 2015.

23.76 billion yuan of transactions were

completed via Ant Credit Pay, which represents

20% of the total GMV.

I this issue…

Executive summary

3

Part 1 – Alibaba 2016 Singles' Day results and major facts

Part 2 – Major strategies and initiatives of Alibaba and JD.com

I pli atio of the “i gles’ Da – What’s the future of e-commerce in China?

Executive summary

• Starting from 2009, Alibaba Group held the world's largest online shopping event on 11 November each

ea , k o as the 11.11 Global Shopping Festival o the “i gles’ Da shoppi g festi al). This year, the

event has been extended from an one-day shopping event on 11 November to a shopping festival that

rolled out through 21 October to 11 November. Globalization is one of the main themes.

• Other e-commerce players such as JD.com have also joined the battle. This year, most players are

leveraging this event to explore new ways of doing e- o e e a d e ha e usto e s’ shoppi g experience. Omni-channel, AR/VR shopping, live streaming e-commerce, and cewebrity marketing are

some of the new breakthroughs.

4

Executive summary - Ke results of 6 “i gles’ Da

Alibaba

• Alibaba reported 120.7 billion yuan (US$ 17.8 billion) in GMV

compared to the 91 billion yuan (US$ 14.3 billion) last year. At 15

hours and 19 minutes into the sale, total GMV surpassed the total

for the 24-hour sale last year. Sales growth was 32%, down from last

ea ’s % a id a o e satu ated o li e etail a ket a d a eake economy.

• 82% of total GMV (98.97 billion yuan, or US$ 14.6 billion) were made

via mobile devices, a substantial improvement relative to last year's

68.7%.

• Globalization remained the key theme. 235 countries participated

this year, up from 232 in 2015.

• 657 million logistics orders were generated in the 24-hour period.

• 23.76 billion yuan of transactions were completed via Ant Credit Pay,

which represents 20% of the total GMV.

• Ant Financial handled a record of 1.04 billion transactions via Alipay,

up 46% yoy from 710 million in 2015. 5

JD.com

(13:33:29)

• GMV exceeded the total GMV of last

ea ’s. (12:00 noon)

• GMV up by 78% yoy.

• 85% of the orders were from mobile

devices.

• The best selling categories included

mobile phone, flat panel TV, washing

machine, air conditioner, and

refrigerator.

• Guangzhou, Beijing, Jiangsu, Shanghai

and Sichuan topped the list in terms of

number of orders.

PART 1 – ALIBABA 2016 SINGLES' DAY RESULTS

AND MAJOR FACTS

6

•

7

2015 2016

T all’s GMV duri g the “i gles’ Da period (billion yuan)

91.2 120.7 32%

Total o ile GMV duri g the “i gles’ Day period (billion yuan)

62.6

(68.7% of total GMV)

98.97

(82.0% of total GMV)

58%

Number of countries / regions

participated 232 235

Numbers of payment

transactions

710 million 1.04 billion 46%

Number of logistics orders 467 million in the

24-hour period

657 million in

the 24-hour

period

41%

Alibaba 2016 Singles' Day results YOY growth

2011 2012 2013 2014 2015 2016

0.8 3.0 5.8 9.3 14.3 17.8

0.8 1.1 1.2 1.5 1.7

NA

1.3 1.5 1.7 2.6 3.1

NA

“i gles’ da has ee getti g igger o er ears…

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(US$ billion)

Key facts about 2016 Singles' Day • Competition shifts away from price. Most e-commerce companies are seeking breakthroughs instead.

This ear’s “i gles’ Da has the follo i g hara teristi s: – More socialized: Social media, live streaming, cewebrities, VR games are all new tools to bring new traffic to e-

commerce platforms.

– Mo e pla ful: E te tai e t, ga ifi atio a e the e t e ds to e ha e usto e s’ shoppi g e pe ie e. – Focusing on seamless customer experience: Online and offline integration becomes the mainstream.

– Expanding to other markets and penetrating into rural areas.

– Shifting from price competition to competition of supply chain of services

• Alibaba and JD.com are having head-to-head competition this year as many other smaller players have

formed strategic alliance with the two Internet giants.

– Previously in August 2015, Alibaba Group Holding announced that it will spend 28.3 billion yuan for a 19.99% stake in

Suning Commerce Group, the third-la gest B C platfo i Chi a, to e o e “u i g’s se o d-largest shareholder.

Du i g the “i gles’ Da this ea , “u i g suppo ted Ali a a i a ious a eas i ludi g de elopi g the lo atio -based

augmented reality mobile game, as well as the online and offline integration with its extensive physical stores

network.

– On the other hand, Wal-mart sold YHD to JD.com in June 2016. JD.com has taken the ownership of the YHD platform

assets, including the brand, website and app.

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Ke fa ts a out 6 “i gles' Da o t’d • Rational shopping is high on the agenda.

– Both Alibaba and JD.com put more emphasis on product quality and encouraged consumers to only buy things that

they really want during the shopping festival. This is also reflected in the ads for the shopping festival where the color

red (usually related to discounts) is not the main color tone.

– Both Alibaba and JD.com rolled out a deposit mechanism in which customers can pay the deposits first if they are

i te ested to u the goods at a dis ou ted p i e du i g the “i gles’ Da p o otio pe iod, a d the a ake the final purchase decision on 11 November. Customers can think carefully before they make the purchase decision.

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Ke fa ts a out 6 “i gles' Da o t’d • Globalization and cross-border e-commerce are still major focuses.

– Ali a a used u glo all , sell glo all as its sloga . This ea , o e top lu u a ds a d ig-name retailers are

willing to join hands with Tmall, and for example, Burberry launched a new product line during Tmall Global Fashion

Show.

11

PART 2 – MAJOR STRATEGIES AND INITIATIVES

OF ALIBABA AND JD.COM

12

ALIBABA

Part 2 – Major strategies and initiatives of Alibaba and JD.com

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Ali a a’s “i gles’ Da strategies 6

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Globalization (Buy Globally, Sell Globally)

• Buy globally: a virtual gateway to China for international brands

• Sell globally: released a new pilot program which enables Hong Kong and Taiwan to shop for overseas brands

Interactive content and entertainment

• Launch of Buy+ VR shopping • Live streaming of fashion shows

Personalization through Big Data

• Customized product recommendation, search results, newsfeed, to user-generated content, etc. for each customer

• Customized storefronts through mobile app for different demographics

Omni-channel upgrade

• Launch of location-based AR game “Catch the cats”

• More than 1 million retailers on Tmall have completed their online and offline integration

• Ke st ategies of “i gles’ Da i lude glo alizatio , i te a ti e o te t a d e te tai e t, pe so alizatio through big data, and omni-channel upgrade.

Ali a a’s “i gles’ Da strategies 6 – Major events

月 日：天猫 小时 即秀即买 全球潮流盛典

月 日：天猫国际联合 全球首发 会场

月 日： 午 点开启 迪士尼时间午 点直播 全球科技创智生态峰会午 点发布 双 爆款清单月 日：与浙江卫视合办 个小时的天猫双 狂欢夜•

• – 红包集结令

– 截 月 日，累计近 万用户参与，其中超过 万人达到条 可领取红包

•15

1 Nov

3 Nov

10 Nov

Live streaming of Tmall Global Fashion Show

• Participants included Burberry, Guerlain, etc.

Launch of Buy+ VR shopping • For the first hour after its launch, almost 30,000 visitors browsed through the Buy+ channel; and 60% of the

visitors were under age 30. These visitors mainly came from Hangzhou, Beijing and Shanghai.

Launch of “Disney interaction time”, and “Check list of hot items for Singles’ Day”

Gala night for Tmall’s Singles’ Day shopping festival • Hollywood actress Scarlett Johansson, sports celebrity David Beckham, basketball legend Kobe Bryant

and pop-rock band One Republic to headline a pre-sale gala and drum up international attention.

Distribution of electronic red packets • Red packets of value $1, $2, $5, $10, $20, and $1,111 as cash coupons for purchasing on Tmall

during the Singles’ Day • Interim results till 31 October: Almost 15 million customers participated and more than 10 million of

them were eligible for receiving the electronic red packets.

21 Oct

Pre-order

• Results (as of 31 October): more than 30 apparel brands recorded over 10 million pre-orders.

New

New

23 Oct

24 Oct – 3 Nov

Ali a a’s “i gles’ Da

– Location- ased AR ga e Cat h the ats

• Starting from 27 October, 2016, more than 2,000 Starbucks outlets,

4,000+ KFC outlets, 500+ cinemas, and department stores such as

Intime, Xidan Joy City participated in this game.

• In this game, there are 60 cats, with different habits and functionalities.

The cats appeared in certain locations in specific time. Game players

could catch the cats either through Taobao or Tmall via mobile phone.

The ould get . ele t o i ed pa kets e a ds fo e e at they caught.

• Some 100 million consumers participated in this game since 5

November. As of 10 November, 1.7 billion virtual cats had been

aptu ed.

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“Catch the cats”

New

Ali a a’s “i gles’ Da

– Bu + VR shoppi g e perie e

• Buy+ was launched on 1 November, 2016 and is open for public use for the first time.

• This initiative allows shoppers to enjoy a virtual shopping experience, from browsing products to completing orders via VR headsets in eight VR sto es, su h as Ma ’s, Ta get, Costco, and P&G, etc.

• For the first hour after its launch, almost 30,000 visitors browsed through the Buy+ channel; 60% of the visitors were reportedly under age 30. These visitors mainly came from Hangzhou, Beijing and Shanghai.

• Tmall has also prepared 150,000 VR cardboard glasses for customers to buy at 1 yuan each to enjoy the experience.

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“Buy+” VR shopping experience

频道 线首个小时就引来了近 万名戴着 眼镜的消费者，六成是 岁以 的年轻人。

New

Ali a a’s “i gles’ Da – Live streaming

• Series of live streaming shows were broadcasted

from 21 October through 11 November. Celebrities,

cewebrities, KOLs, and athletes appeared on the

shows.

• Ali a a’s T all Glo al Fashio “ho is a ke e e t that ki ked off the “i gles’ Da shoppi g festival.

• Alibaba hopes to create an environment that allows

consumers to connect entertainment and

purchasing.

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Live streaming

On 23 October, 2016, Alibaba live-st ea ed a see o , u o fashio sho ia Taobao Live Streaming on Tmall,

Youku, and Mobile Taobao, which attracted 7 million

viewers. Viewers were able to order the items displayed

during the show in real time.

New

Ali a a’s “i gles’ Da strategies – Logistics preparation

• Cainiao, Alibaba's logistics arm estimated that there would be around 2.68 million logistics workers in a tio du i g the “i gle’s Da shoppi g festi al, up o e % o , hile the u e of deli e trucks and the volume of air freight were estimated to increase by 59% and 40% yoy respectively.

• Cai iao a ou ed that fo the fi st ti e du i g the “i gles’ Da shoppi g festi al, it ould pa t e with delivery companies and have several hundred thousand express delivery workers to provide crowdsourced delivery service.

• Most of the shipment or express delivery waybills would be digitalized. This year, 70% of the parcel would undergo the smart sorting system of Cainiao, which could greatly enhance efficiency. The pre-order mechanism, and predictions from Ali Cloud would also play an important role in facilitating the delivery process.

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Domestic deliveries

Ali a a’s “i gles’ Da strategies – Logisti s preparatio Co t’d

• Cainiao has been streamlining the customs process to speed up cross-border delivery and support

Ali a a’s u glo all i itiati e. Cai iao offe ed dis ou ts ~ illio ua to i po te s usi g its bonded warehousing services in six major ports, such as Shanghai, Guangzhou and Chongqing during

the “i gles’ Da sales e e t. Also, Cai iao’s o e seas fulfill e t e te s i Ho g Ko g a d Australia commenced operation so as to provide better services for consumers, such as on-time

delivery, delivery tracking as well as simplified custom clearance procedures.

• Cainiao also supported the "sell globally" initiatives of Alibaba by offering cross-border delivery

solutions to overseas orders from Hong Kong, Macau, and other countries. For deliveries to Hong Kong,

the average delivery time would be around 3-7 working days. Cainiao has an extensive network

covering 224 countries and regions and partnered with 49 cross-border logistics providers.

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Cross-border deliveries

JD.COM

Part 2 – Major strategies and initiatives of Alibaba and JD.com

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• JD. o held a edia e e t to a ou e its a keti g st ateg fo the “i gles’ Da shoppi g festi al o 8 O to e . The platfo ill fo us o th ee a eas, a el p odu t ualit , logisti s se i es a d usto e s’ experience.

JD. o ’s “i gles’ Da strategies 6

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好物低

Rational shopping

Product quality

Logistics services

Custo e s’ experience

Provide customers with

top quality products at

lower price point

Provided speedy delivery;

delivery fees and

inventory fees vary

depending on the time of

purchase

Use new technologies

such as delivery drones

and warehouse robotics

to improve customers’ shopping experience

• 今年京东 双 活动的 题 好物低 极 服务 和 智能体验 消费者提供更好的选择，倡导消费者理性购物

JD. o ’s “i gles’ Da strateg 6 – Major events

26 – 31 Oct

1 Nov

2 – 9 Nov

10 – 12 Nov

Pre-order for JD Worldwide • Pre-sale products from JD Worldwide

Super flash sales day • Selling price started from 1.11 yuan, with more than 1,000 products • Results: • 10x the no. of products sold on the same day last year, and helped customers to save

more than 2.8 billion yuan • Top-selling items: Mobile phones, tablets, notebooks, gaming devices and washing

machines

Super sales day • Selected products (by category) were on sale each day • Product categories include computer, tablets, mobile phones, TV, home

décor, mother and infants products, and women’s wear

Crazy sales day • All product categories were sold at a discount

日，京東 超級秒殺日 開啟了十一 網購盛宴的首場活動，共 大秒殺專場。單品秒殺，每 個小時更新一場，每場 個全新單品；超級單品秒， 款精選好物， 點準時開秒；品牌秒殺， 千大牌低價齊聚，盡情秒殺。相比天貓的預售模式，京東在雙十一首日就 演大規模的全天全品類低價秒殺活動，不僅在用戶體驗 ，給消費者預留出更多的選擇空間，還 助於消費者理性消費的回歸。超級秒殺日 全天累計售出商品 數達去年同期的 倍，全天共為用戶節省超過億元。

23

New

New

JD. o ’s “i gles’ Da strategies – Logistics preparation

JD.com tried to differentiate itself from Alibaba by providing delivery services through its own in-house

logistics team. This year, JD.com added a range of new initiatives to attract merchants to use its delivery

se i es a d e ha ed its deli e apa it du i g the “i gles’ Da shoppi g festi al.

•Offered 500 million yuan subsidies for merchants using its delivery services

•Additional night time delivery

•Expanded its logistics network in urban areas by optimising 40+ delivery routes in 100 cities

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JD.com’s logistics preparation

JD. o ’s “i gles’ Da strategies – Logisti s preparatio Co t’d

• Used robotics for express delivery in nine key cities

– JD.com introduced robotics for express deliveries in key cities including Beijing,

Shanghai, Guangzhou, Chengdu, Wuhan, Xian, Shenyang, Hangzhou and

Shenzhen. JD.com used these unmanned vehicles to deliver goods to specified

locations and inform customers through JD app or through SMS. Customers can

input the codes and collect their orders.

• Expanded its logistics network in rural areas

– JD.com implemented smart warehouses and distribution centres across the

nation, to ensure speedy deliveries to remote areas.

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JD.com’s logistics (Cont’d)

I pli atio of the “i gles’ Da – What’s the future of e-commerce in China?

A more globalized competitive landscape. More global retailers, big or small, are set to leverage e-commerce to tap the China market. Cross-border e-commerce is a great point of entry to China.

26

Mobile, mobile and mobile. Chinese consumers have adopted mobile connectively as the dominant approach to accessing the Internet. Mobile-enabled websites or mobile apps with location-based and interactive functions, and can enable consumers to do all their shopping, payment, etc. are critical elements for success.

A more comprehensive omni-channel strategy. O2O will continue to be a strategy for retailers and brands to integrate online and offline resources. O2O is also quickly extending beyond retailing across different industries.

• F o the esults of the “i gles’ Da this ea , e ide tif so e ajo fo uses i Chi a’s e-commerce

sector in the coming year.

New innovations and new business models continue to make an impact. Ongoing innovations and the emergence of new business models on the one hand will intensify competition in the market; on the other hand, they will also provide abundant opportunities for players.

VR/ AR shopping is another trend to watch. The technology breakthrough is set to revolutionize the e-commerce sector. More companies have started to adopt VR and AR technologies

ith a hope to e ha e usto e s’ shoppi g e pe ie e.

Social media strategy is crucial. The power of social edia i Chi a’s e-commerce sector cannot be

ignored. Interactive live streaming and cewebrity marketing are some new channels for doing businesses.

Contacts

Asia Distribution and Retail

Teresa Lam

Vice President

(852) 2300 2466

teresalam@fung1937.com

Christy Li

Senior Research Manager

(852) 2300 2476

christyli@fung1937.com

Renne Chan

Research Manager

(852) 2300 2465

rennechan@fung1937.com

Fung Business Intelligence

10/F, LiFung Tower,

888 Cheung Sha Wan Road,

Kowloon, Hong Kong

Tel: (852) 2300 2470

Fax: (852) 2635 1598

Email: fbicgroup@fung1937.com

http://www.fbicgroup.com/

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