Alibaba’s Singles Day Profits Cause Misery Among Mercantile Concerns

Posted: Nov 11 2014, 3:26am CST | by , in News | Technology News

Alibaba’s Singles Day Profits cause Misery among Mercantile Concerns
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Alibaba’s Singles’ Day profits have caused considerable misery among mercantile concerns thanks to the margins allowed.

Alibaba is ready to bully Wall Street with its profit making records on Single’s Day. This happens to be the most humongous festive occasion of the year and it takes place online. Mercantile concerns however have held grudges against the giant.

Their complaint is that they are the ones who have rolled out the red carpet for Alibaba in the first place. It was the Alibaba Group which made the occasion of Single’s Day into a profitable venture worth billions of dollars. And whereas the previous year sales figures went till almost $6 billion, this year it might touch the limit of $8 billion.

In fact, it can amount to even more than that. By midday, the count was almost $5 billion. So it is not such a far off target at all. Other groups that are in on the game include such giants as: Amazon, JD, Vipshop Holdings, Suning Commerce Group and Wal-Mart Stores. The Chinese premier has also lauded the event as a good economy booster.

However, one group which was not happy with the scheme of things was the mercantile class. Most merchants complained that they had been hoodwinked by Alibaba’s Tmall to increase growth figures by offering excessive discounts. This of course had hurt their business immensely.

While there is no pressure on the merchants to enter the game plan, once they do they have to offer at least 50% discounts on the products and services which is asking for a lot. Sometimes the discount rates are so high that it pinches the merchants to no end.

And Alibaba uses the blackmail strategy of pushing these merchants down the lists if they refuse allowance of excessive discount rates. This then makes them lose potential clients and customers. When Alibaba execs were queried regarding this, they said that they had no comments to offer on the activities of the competition.

One of the merchants spoke of how his deal with Alibaba was going well until he refused to obey the steep discount demands. That was when he slipped down the rankings and his business was badly hurt. Alibaba’s deal is basically a pre-sale initiative. The whole operation begins from as early as mid-October.

It all ultimately ends up being in favor of Alibaba and it has the upper hand in the final analysis. But while many merchants may carry grievances in their hearts against the setup, Alibaba reminds them that when there are more sales, the profits automatically burgeon and benefit everyone through the trickledown effect which is such a well-known phenomenon of economics. And it may just be right on this one.

Source: Reuters

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<a href="/latest_stories/all/all/20" rel="author">Sumayah Aamir</a>
Sumayah Aamir (Google+) has deep experience in analyzing the latest trends.




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