Like a lot of holidays, Singles Day was created as a marketing stunt: On November 11 (or 11/11, such that the date consists only of ones), single consumers in China embrace being without a romantic partner by buying gifts for themselves. Although only introduced in 2009, Singles Day has rapidly grown into one of the biggest shopping days of the year in China, with particularly prominent benefits for Alibaba, the dominant online retailer that first came up with the idea for promoting the day as a shopping bonanza.
For years, Alibaba has momentously announced its sales figures for Singles Day, and year after year, those numbers have grown exponentially, reaching an estimated $74 billion in 2020. But in 2021, the holiday and its associated marketing took on a different character, reflecting external influences that are altering the retail environment for Alibaba and thus for retailers across China, as well as throughout the world.
In particular, following about a decade of massive economic expansion and growth, China’s central government has adopted a different attitude, shifted priorities, and new regulations when it comes to retailing. Soon after President Xi Jinping announced a national goal of common prosperity, achieved through equitable wealth distributions, new regulations and policies went into effect as well. For example, online retailers may not block links to competitors’ sites, nor may they overwhelm consumers with marketing messages in the days leading up to Singles Day. Whereas Alibaba once represented an ideal version of China’s market liberalization efforts, it recently was compelled to pay a $2.8 billion fine, as punishment for its antitrust and anticompetitive practices.
These new regulations have meaningful implications for not just the giant Alibaba but also the smaller retail operators that compete with or post their products for sale on its TMall site. Seemingly reflecting its embrace of the common prosperity ideal (e.g., it added this phrase to its own corporate responsibility statement), Alibaba reportedly has increased the support, assistance, and guidance it provides to small retailers and merchants on its site, as well as reducing the fees required to appear on TMall.
Such efforts are visible; it is harder to identify, quantify, or track another way in which Alibaba still controls competition in the retail market. That is, it decides which products to display to consumers who search for certain items, and according to some merchants, it still tends to direct them toward its own products for sale, rather than alternatives available from the smaller sellers. Such allegations may sound familiar to students of Amazon, which similarly has been criticized for pushing its own branded products, to the detriment of products offered by other, smaller retailers that appear on its product pages.
In parallel with its claims of greater fairness, Alibaba is embracing other versions of corporate responsibility, such as environmentally conscious consumption. It has established new routes for buyers to return shipping and packaging materials for recycling. If they buy more energy-efficient versions of products, consumers also can receive vouchers from Alibaba for future green purchases. Thus the retailer’s public actions have changed, in response to regulatory and institutional pressures. Do those visible changes also mean a revision to its actual practices and strategies?
Discussion Question:
- How do differences in the countries and economies in which retailers operate affect their operations?
- When subjected to institutional requirements, such as the drive for common prosperity, how should retailers respond? Is Alibaba’s response sufficient, in your view?
Source: Raymond Zhong, “A Chastened Alibaba Tones Down Its Singles Day Retail Bonanza,” The New York Times, November 10, 2021; Yihan Ma, “Alibaba’s Gross Merchandise Volume on Singles Day from 2011 to 2021,” Statista, November 12, 2021