China’s Singles’ Day shopping festival, created by Alibaba (BABA) in 2009, has long been seen as a sign of consumer strength. But this year’s event tells a different story. Spending has slowed as more shoppers look for cheaper goods and cut back on non-essential items.
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Sales for this year’s Singles’ Day began early, starting on October 9, and are set to wrap up by the end of this week. By October 31, retail data firm Syntun said total sales had already surpassed 1 trillion yuan ($140 billion). Although that figure appears strong, analysts said much of the spending came from deep discounts rather than a real pick-up in consumer demand.
Many Chinese consumers are spending less this year. Economists believe this cautious mood shows that people are still worried about jobs and income. “Confidence remains quite downbeat among households,” said Lynn Song, Chief Economist for Greater China at ING Bank.
Alibaba Pushes for Sales but Faces Challenges
To boost sales, Alibaba and JD.com (JD) started their Singles’ Day discounts earlier than usual. “It’s an attempt by players like Alibaba and JD.com to drum up business,” said Shaun Rein, Managing Director at China Market Research Group. However, weak consumer confidence means this year’s results may fall short of previous years.
With spending at home slowing, Alibaba’s Taobao platform has expanded Singles’ Day promotions to 20 countries, including Thailand, Vietnam, and the Philippines.
For Alibaba, this year’s Singles’ Day is a key test of how much Chinese consumers are willing to spend. The company is working to keep shoppers engaged with heavy discounts at home while also pushing for faster growth in overseas markets.
Is Alibaba Stock a Good Buy Right Now?
Analysts remain highly bullish about Alibaba’s stock trajectory. With 19 Buy ratings and two Hold ratings, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $198.21 implies about 19.48% upside potential from current levels.
