China’s largest Internet retailer Alibaba Group Holding Ltd. smashed all the previous records of its November 11 shopping festival. Last year, Alibaba topped $3.1 billion in sales on 11/11. But this time its two main platforms Tmall and Taobao crossed that figure in less than 13 hours, the Chinese company said on Twitter. That’s much bigger than the U.S. Cyber Monday sales of $1.46 billion last year. By 6:30 PM local time, the online retailer had received orders worth 26.2 billion yuan ($4.3 billion).
Xiaomi leads sales on Alibaba platforms
November 11 is the Singles’ Day in China. It’s a particularly dull period in the year. The 11/11 shopping festival began in 2009 when Alibaba began offering discounts to boost sales. More than 70,000 merchants including Nike Inc (NYSE:NKE) and The Gap Inc. (NYSE:GPS) have storefronts on Tmall offering up to 70% discounts.
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As the shopping festival began at midnight, transactions surpassed 1 billion yuan within just 11 minutes. Last year, it took the company 37 minutes to touch that milestone. One company that stole the thunder was smartphone maker Xiaomi, which generated 100 million yuan ($16.4 million) in sales in the first three minutes. Xiaomi sold 110,000 units of its new smartphone model Mi3, and 330,000 units of its flagship Hongmi phone.
It shows that Chinese consumers are shifting away from traditional stores to online retailers. Last year, online sales accounted for 6.3% of China’s total retail sales, up from 4.3% in 2011, according to Bloomberg. China has only 45% Internet penetration, which means the country should see massive online sales growth in the next several years as more consumers make it online.
Alibaba expects to receive 130 million orders today
However, the shopping festival poses a big challenge for China’s underdeveloped logistics industry. Alibaba expects to receive more than 130 million orders on 11/11. The country’s logistics industry doesn’t have advanced computer systems and modernized warehouses. The orders will be processed and shipped over the rest of the week. Logistics companies are hiring more workers to deal with the traffic.
The record-breaking sales come at a time when Alibaba is planning to go public. Its discussion with the Hong Kong stock exchange was unfruitful. As a result, the company plans to list itself in the U.S.