How Alibaba’s Singles’ Day profits from technology
Alibaba’s Singles Day raked in $38.4 billion in sales, thanks to sophisticated tech including its cloud infrastructure, AI and live streaming.
Wherever you live, chances are that you’ve heard of Singles Day.
It began as an obscure Chinese holiday celebrating the country’s bachelors – the date it’s held, November 11 (11.11) is a graphic representation of four single people. However, these days Singles Day is better known for being the world’s largest 24-hour shopping sale, run by Chinese ecommerce giant Alibaba.
This year, Alibaba smashed sales records on ‘Singles Day’. $13 billion was notched up in the first hour, rising to a total of $38.4 billion by the end of the day. What explains these meteoric figures? In a word, technology.
Alibaba draws upon various sophisticated technologies for two fundamental reasons: to keep its ecommerce platform running smoothly and to drive sales.
At its most recent Singles Day, the Alibaba e-commerce platform was used by over 500 million people in 24 hours. With orders coming in thick and fast, it needs powerful technology to support it.
That’s why Alibaba Cloud was developed.
Up until 2009, Alibaba relied on technology from Yahoo, one of its largest shareholders. But Jack Ma, Alibaba’s founder, wanted the company to develop its own technology. He pledged to invest a billion yuan ($140 million) per annum into building Alibaba’s own computing systems. A team of engineers developed Apsara, a cloud computing system that can cluster thousands of PCs together, implementing a powerful performance.
“Alibaba is investing at a tremendous rate to build up its cloud services. It has become one of the world’s hyperscale cloud players, catching up with Amazon, Microsoft and Google,” said Martin Garner, Senior Vice President at CCS Insight.
This year, Alibaba Cloud processed around 970 PB of data to sustain a 24-hour shopping spree with a peak order rate of 544,000 a second, over a thousand times that of the inaugural Singles Day festival in 2009.
The seamless performance of the Alibaba Cloud at this year’s Singles Day has highlighted the adaptability and maturity of the system.
Alibaba Group CTO and President of Alibaba Cloud Intelligence Jeff Zhang said: “Alibaba Group is like a high-speed jet that is capable of upgrading its engine during the course of flight. We are the first company in the world to run all core business systems on our own public cloud platform.”
Aside from its increased processing speeds, there’s another great result of the Apsara Cloud’s sophistication – it consumes less energy. Thanks to self-developed green technologies such as liquid immersion and deep-water cooling, overall data centre energy consumption dropped 70 percent from 2018.
But that’s not all. Alibaba has also been leveraging various AI technologies to drive sales. On Tmall – the company’s business to consumer platform – thousands of merchants were upgraded to Version 2.0 storefronts in time for Singles Day. Version 2.0 provides a unique interface where a 3D avatar can try on clothes and jewellery, helping consumers make purchasing decisions. The conversion rate per purchase increased by 20 percent on last year.
More than a million orders were processed through voice command using Alibaba AI Lab’s smart speaker, Tmall Genie. Items purchased by voice command included 1.4 million tonnes of rice and 810,000 eggs – a sign that AI technology is becoming part of the everyday shopping experience.
Meanwhile, shoppers with inquiries were helped by Alime Shop Assistant, Alibaba’s customer-service chatbot. During Singles Day, Alime Shop Assistant handled 97 percent of all online enquiries.
Another key sales driver is live streaming, or “shoppertainment” – a term used to describe the combination of entertainment and commerce that characterises livestreaming in China. Livestreaming combines three popular elements: mobile videos, KOLs (Key Opinion Leaders) and exclusive offers. It’s particularly popular in China, where urban consumers spend around 4.5 hours a week watching online videos, often on their mobile phones.
Discussing the success of livestreaming, Wang Xiaofeng, senior analyst at Forrester Research explains: “Recommendations from KOLs and real-time comments from peers help consumers make purchase decisions faster. Livestreaming sessions often include exclusive limited-number and limited-time offers that create urgency to buy.”
On Singles Day 2019, Alibaba used livestreaming to its full advantage through its livestreaming website Taobao Live. It began the Singles Day streaming extravaganza with a three-song performance from Taylor Swift in front of a 71,000 strong crowd. Throughout the livestream, video AI identified products mentioned by broadcasters and influencers – product links were simultaneously displayed on screen, allowing instant purchasing. All in all, Tabao Live generated nearly $2.8 billion, which is around 7.5 percent of total Singles Day sales.
But for Alibaba, Singles Day is about more than financial profit. It’s also the day where it can stress-test its technology systems at an event that will only continue to grow in sale with every passing year. Singles Day has prompted Alibaba to push the boundaries of technological innovation, especially in the areas of cloud technology and AI.