Alibaba beats singles’ day sales – here’s why
Alibaba Group has accrued an eye watering $17.8 billion in sales following China’s Singles’ Day shopping festival. This blows last year’s $14.3 billion out of the water and shows that ecommerce will remain on its upward trajectory.
Jimmy Huang, of Warwick Business School, is an Associate Professor of Information Systems and has researched digital ventures in China. He commented: "We have now entered the 'experience economy' and Alibaba may well be tapping into this with their Singles Day campaign. Users are consuming products or services for more than just utility purposes. For digital ventures it is now a question of understanding your users and being able to provide products, services and apps that fulfil their experience expectations.
"As one of China's digital entrepreneurs told us, in the experience economy 'there is nothing more powerful than emotionalising your users'. Is this exactly what Alibaba has managed to do with the Singles Day - 'emotionalising their users'?”
He also explained that large digital ventures are able to exploit their user base to innovate. With one of the largest user bases in China, Alibaba is not just strong in its Singles Day sales, but powerful in virtually every business it enters.
He added: "This is the emerging trend of 'user base-centricity'. Compared with our conventional emphasis on customers and customer base, there is a clear shift in focus towards users and user base. Even though not all users contribute to a firm's revenue, they are crucial sources for service innovation, performance improvement and business extension. Even when estimating a digital firm's market capitalisation, such as Alibaba, every user counts.
"Alibaba and its Chinese digital cousins are growing in very different ways to their US and global counterparts. There is a growing trend in China to fully maximise the revenue potential of digital ventures' user base through business extension.
Many global digital firms, he explained grow their user bases and revenue streams through internalisation, he pointed out but Chinese digital firms tend to grow by extending their product or service range.
Huang said: “By doing so, the needs and usage frequencies are increased, which directly enhances the 'stickiness' of their users. How often do you use Airbnb’s app? In China you might struggle to live without Alibaba’s apps even for a day. When some of the users told us that 'they live in the apps of Alibaba', you can understand why."
Business Review Asia's November issue is now live.
Follow @BizRevAsia and @MrNLon on Twitter.
