E-commence giants get ready for Singles’ Day

JD.com launches massive warehouse; Alibaba offers promotions

China's e-commerce giants have started gearing up for the country's annual biggest online sales event, with JD.com Inc on Monday beginning operations of a large warehouse in Shanghai to meet with the growing demand during Singles' Day.

The initial phase of the warehouse features floor space of 100,000 square meters and will help increase JD's logistics efficiency, particularly during peak periods such as the upcoming Singles' Day period, which runs from November 1 to November 12, the company said in a statement on its website. A second phase set for the future will double the warehouse's floor space to 200,000 square meters.

Singles' Day falls on November 11, but online retailers have already launched a variety of promotions to attract customers since early October.

Tmall.com, Alibaba Group's business-to-consumer marketplace, has launched a pre-sale promotion for home appliances since Wednesday, with more than 60,000 units of television sets, washing machines, refrigerators, air conditions and water heaters having been booked as of Sunday.

As part of Alibaba's international strategy after its New York IPO on September 19, Tmall has also attracted more than 200 overseas retailers to participate in this year's sales event, Wang Yulei, president of Tmall, told a media briefing on October 13.

Tesla Motors announced Monday that it will join Tmall's sales promotion on Singles' Day.

Buyers can pay a deposit of 50,000 yuan ($8,150) to Tesla through Yu'ebao, an online wealth management product, to book the limited version Model S and pay the rest of the car's price in Tesla's offline, physical stores.

However, Tesla did not specify whether it will offer any discounts to online buyers.

Tmall.com and taobao.com, Alibaba's consumer-to-consumer platform, recorded aggregate sales of 35 billion yuan in last year's Singles' Day shopping promotion.

Wang predicted that this year's sales revenue will surpass last year's level. Media reports said Alibaba's target is 50 billion yuan for the upcoming event, citing unnamed sources.

"It is the first Singles' Day following Alibaba's listing, so the sales revenue will affect its shares price," Mo Daiqing, an analyst with China e-Business Research Center, told the Global Times Monday.

Mo said Alibaba's biggest rivals are JD and suning.com, but they are not likely to challenge the former's No.1 position in terms of sales.

JD's sales revenue was 3.5 billion yuan for last Singles' Day, just one-tenth of Alibaba's. Suning did not release its sales revenue for last year's Singles' Day.

The online shopping frenzy will test China's logistics industry.

The State Postal Bureau estimated that more than 500 million express delivery items will be handled during the Singles' Day period between November 11 and 16, surging by 50 percent year-on-year, according to a statement it released on Thursday.

"Previous Singles' Day promotions have put huge pressure on express delivery firms, and led to problems such as delivery delays and damaged goods," Xu Yong, chief consultant at China Express and Logistics Consulting, told the Global Times Monday.

He expected the situation to become worse this year, as several large cities such as Tianjin and Guangzhou have banned the use of electric tricycles, the most common vehicles used by domestic courier firms for "last mile delivery," while Beijing has banned both the use of fuel-powered as well as electric tricycles.

Beijing will also roll out an odd-even license plate system between November 3 and 12, limiting the use of autos during the 2014 APEC Economic Leaders' Week.

"With a self-operated logistics system, JD could offer better user experience amid the delivery boom," Mo said.

JD said its new warehouse has the capacity to sort up to 16,000 packages per hour.

The e-commerce firm has also started the construction of similar warehouses in Guangzhou, South China's Guangdong Province, Wuhan, Central China's Hubei Province and Shenyang, Northeast China's Liaoning Province, with additional facilities planned for Beijing, Chengdu, Southwest China's Sichuan Province and Xi'an, Northwest China's Shaanxi Province.

The NASDAQ-listed firm is among a few online retailers that offer same-day delivery.

"I ordered some books on its website Friday noon and chose the night delivery service, and received the parcel around 9 pm that day [without additional charges]," Yang Sisi, a 31-year-old online consumer in Beijing, told the Global Times Monday.

"But it usually takes two to three days to receive the goods that I bought on Tmall or Taobao," she noted.

Alibaba's self-built logistics system Cainiao Network has not fully taken shape and its e-commerce platforms still depend on courier firms, which will make Alibaba more exposed to consumer complaints following Singles' Day, Mo noted.