Monday marks the beginning of Prime Day 2018. The artificial holiday created by the online retail giant Amazon offers deals on a variety of goods. In 2017, the holiday generated about $2.8 billion in sales and is projected to do even better this year. Prime Day, however, records a tiny fraction of the sales by Chinese e-commerce giant Alibaba’s Singles Day, which saw more than $25 billion in spending in 2017. Although Prime Day might be big, here’s why it doesn’t yet compete with the Singles Day shopping bonanza.
Singles Day was originally a day to celebrate those without romantic partners and is observed in China on Nov. 11, because the number one symbolically represents being single. Alibaba, however, has rebranded the day as a shopping carnival encouraging customers to purchase gifts for themselves. In many ways, Amazon’s Prime Day copies the idea behind Singles Day, making an artificial holiday for online shopping — but, by all accounts, the Chinese version is more over the top with performances and game shows making for a highly interactive shopping experience.
Online spin wheels and games are not the only differences between the two e-commerce giants. For one thing, the business model is different. Alibaba doesn’t make any of its own products, as Amazon does, but instead connects buyers and sellers. For this reason, Singles Day in 2017 was not only a record-setting day for Alibaba but also recorded high sales for brands selling on its platform, such as Apple or Nike. Alibaba, unlike Amazon, also shares consumer data with its partners, helping companies better cater to the Chinese market.
Additionally, Alibaba, unlike Amazon, does not require membership of any kind. While Amazon Prime membership is certainly popular, its $119 price tag means that many users will never fork over the money. Since Prime Day is targeted at members (nonmembers can register for a free trial), its user base is smaller. Selling membership is part of Amazon’s model, but one that may eventually push customers to competitors like Walmart or Target who are this year offering deals timed to compete with Prime Day with no membership required.
Perhaps most importantly, Alibaba taps into China’s huge and expanding e-commerce market, whereas Amazon already dominates the much more mature U.S. market. For now, Amazon seems able to compete. But as more and more people get online in China, Alibaba with its flagship platform Taobao can continue to grow its business in territory it already dominates. Demonstrating the difficulty Amazon might have facing this reality, the U.S. based company has largely decided to forgo the Chinese market, although it does maintain a small presence there.
