In the West we celebrate Valentine’s Day on the 14 February. Otherwise known as the day of romance. Couples exchange cards, candy, gifts or flowers with their special valentine. It’s a day of love and romance. All the stuff that makes a single person want to vomit. It’s also boom time for retailers and florists who can make a year’s worth of sales, all on that one special day. In China however, forget Valentine’s Day. It’s the opposite. The Chinese celebrate ‘Singles Day’ which started as an obscure ‘anti-Valentines’ celebration by bachelor university students back in the 90s. They bought themselves presents to celebrate their singledom. From there it spawned into a retail bonanza.
You might be left wondering why we don’t have such a day?
The date is 11 November that ‘Singles Day’ or or ‘Guanggun Jie’ takes place. It’s an entertaining festival where Chinese celebrate the fact that they are proud of being single. November 11th (11/11), is chosen because the number “1” resembles an individual that is alone. Who needs a partner to have fun, when you can celebrate being single? You can buy yourself a present and pat yourself on the back for being single. How refreshing. The odd thing about this odd festival is that it isn’t just an odd festival.
It is the largest offline and online shopping day in the world.
No really. Forget Black Friday and Cyber Monday, they pale in comparison. Black Friday celebrated mainly by the Americans raked in online sales of US$3.34bn. Cyber Monday pulled in US$3.39bn. China’s Singles Day on the other hand, managed to rake in an eye popping US$25bn (A$33.7bn) last weekend. That’s four times bigger than Black Friday and Cyber Monday combined, the biggest shopping day in the US calendar. This year it smashed all previous records for the world’s largest retail event. Single’s Day is promoted annually by Chinese e-commerce giant Alibaba. Companies offer deep discounts for a wide range of products sold during the 24-hour period. Last weekend, saw customers spend 40% more on Alibaba than last year. The sales figure reached in 2016 was breached in just 13 hours. $1bn was spent in the first two minutes after midnight. This year there were over 15 million products from more than 140,000 brands, including 60,000 international brands that offered discounts on Tmall. Other platforms like JD.com have become a key competitor. And it’s now become a huge festival that has evolved into a cultural phenomenon. On Friday night Alibaba hosted a lavish gala in Shanghai. Celebrities such as Nicole Kidman, Pharrell Williams and Maria Sharapova appeared on stage and helped count down the moments before the participating brands released their Singles Day deals to shoppers. Past performers have included David and Victoria Beckham, Daniel Craig and Kobe Bryant.
You can imagine the army of logistics workers required to deliver millions of orders. Here are a few facts from this year’s splurge:
- In one day Single’s Day shoppers spent one third more than all Australian retail sales in one year.
- Australian annual retail sales figures come in at $26bn. Singles Day sales figures topped $33.7bn.
- Australia was the third largest source of sales behind Japan and the US.
- Suisse and Bio Island were named in the top 5 brands outside China.
- Popular Aussie brands that always participate: Blackmores, Chemist Warehouse, Suisse, Treasury Wine Estates.
- 325,000 orders were recorded per second. They involved the delivery of 777 million parcels.
- Alibaba managed this feat using online payments business Alipay and its own logistics business.
- New Zealand-made Aptamil took the prize as being China’s new darling of milk powder.
- Top products were: Aptamil, Bio Island, Swisse Vitamins, Japanese nappy brands Kao Merries and Moony.
- 60 brands that generated more than US$15m in sales including Apple, Estee Lauder, Gap, L’Oreal, Nike, Samsung, Uniqlo and Zara.
- Chemist Warehouse broke its own record last year of $17 million seven hours after trading started.
- Popular brands on Chemist Warehouse’s Tmall platform on Alibaba include Swisse, Bio Island, Cenovis, Ostelin, Goat and Lifespace.
Who are the beneficiaries of Singles Day?
Alibaba – Although Singles Day isn’t well known in Australia, it ought to be. It’s the biggest event in the world and shouldn’t be ignored. It definitely deserves more attention here. Alibaba’s Singles Day puts Amazon Prime’s Day to shame which only sold $1bn in goods. Chinese e-commerce platform Alibaba is obviously the biggest beneficiary from the event since it turned the event into a sales monster. This time Alibaba’s Tmall.com sold over $25 billion of product on its platform. That’s via its Taobao marketplace and Tmall brand store although it does offer sales via its international services and it ships worldwide. That’s a 39% increase on last year’s sales total of $17.79bn. Alibaba’s stock has soared by a whopping 112% in 2017. FY revenue growth is forecast between 49% and 53%, this stock has plenty of upside. But it’s not just Alibaba who saw an increase in sales.
JD.com – China’s second largest platform riva JD.com quietly stepped out and closed the gap. JD.com revealed its figures for Single’s Day. It made a whopping $19.14 billion up more than 50% from 2016. Whilst not as high as Alibaba’s $25bn, it’s not bad. JD.com’s sales are however from November 1 until November 12. So it’s not just the one day. There’s no direct comparison but the figure is only a smidge above Alibaba’s 2016 sales. Whilst not on the same level, it’s quietly closing the gap and is a real challenger to Alibaba.
Wal–Mart – Partners with JD.com and is also a big beneficiary from the day. It has a 12% stake in the JD.com. Both have expanded their strategic partnership.
Brands that sell on the day – This year there were over 15 million products from more than 140,000 brands, including 60,000 international brands, all offering discounts. Naturally the companies that offer products that sell the best, stand to benefit. If history is anything to go by, last year A2 Milk’s revenue surged because of strong sales recorded on Singles Day. Good sales during this period gave A2M a bumper start into last year. One of the big trends this year was luxury brands. The biggest winners were 82 brands which topped 100 million yuan in sales. The biggest winners were Nike Inc, Xiaomi Corp. and Uniqlo Co. Some of the Australian names include: Blackmores, Treasury Wine Estates, A2 Milk and other brands.
Shoppers – Obviously shoppers including yourself can catch a good bargain from Singles Day. Finder.com said ASOS was offering its customers 30% off and Cotton On was offering 20% off everything including Typo, Cotton On Body and Rubi Shoes.
How can an investor benefit from Singles Day?
There are two ways:
- Buy direct equities on the specific exchange or
- Buy a managed fund that holds these companies.
The first way is pretty straight forward – Simply purchase any of the above mentioned stocks direct through your share broking account. Easy done. Instead of going through ASX or NYSE listed brands that participated in Singles Day, such as Blackmores or A2 Milk, we think there is more merit investing in the two biggest beneficiaries Alibaba and JD.com. Both these two companies are e-commerce giants and after last weekend’s $25bn extravaganza, you’d be silly not to have these two stocks in your portfolio. In terms of scale, this event just dwarfs anything else out there. Both stocks are direct beneficiaries from this event and are cash cows in the making.
How to play
Investors seeking to tap into the Singles’ Day in a diversified way, need to focus on the following two Managed Funds that provide substantial exposure to the Chinese e-commerce segment.
The Antipodes Global Fund – JD.com
This fund is an unconstrained, long-short global share fund. The fund seeks to generate absolute returns in excess of its benchmark, MSCI All Country World Index, by adopting a pragmatic value approach to selecting investments. The management team identify investment opportunities in terms of broad global thematics or ‘clusters’, be they societal, sectoral or country specific. The Antipodes team have a great deal of experience investing throughout Asia, including China, India, Hong Kong, Japan and Korea, which results in a natural bias of this fund towards the East. The importance of Asia is continuing to grow as the centre of financial markets gravitates towards China. This fund holds JD.com.
Platinum International Brands – Alibaba
Run by a well-known and highly experienced fund manager, focuses on companies with recognisable consumer brand names. The fund offers investors diversified exposure to businesses that operate in a variety of industries and from all parts of the world, from iconic brands in luxury goods to producers of food and beverages, personal care products, household appliances and other consumer durables, from retailers with strong regional presence to financial service providers with global branding. The fund has a 4.9% holding in Alibaba.
And there you have it. Two simple and easy ways to give your portfolio exposure to China’s two e-commerce cash cows that just raked in $33.7bn and smashed every retail sales record that ever existed. You’d be silly not to have exposure to these two stocks. And if by chance you’re single this time around next year and feeling a bit lonely, don’t worry. Logon to Alibaba or JD.com and buy yourself a present. Not only do you deserve it but you’ll never get a better opportunity to treat yourself for your singlehood.