Saturday, November 28, 2015

Bowenpress estimates 64% of Alibaba's "singles day" GMV is fake....

Bowenpress, a SanFrancisco based Chinese language news website, founded in 2004, is reporting that the 11/11/15 "singles day" is not all that Jack Ma and company make it out to be.  As my readers know, I'm not conversant in Chinese, but I have a number of good friends who are.  You can get a rough translation using Google Translator, but here are some of the more remarkable translations, per my good friends:

"On TMall's Global Shopping Festival of 11.11.2015, the platform saw 91.217 bln in transactions, of which 68.67%, or 62.642 bln, were by mobile handset. creating yet another Chinese consumer miracle.Today, the total return rate for TMall and Taobao is 64%, exposing the high rate of fake transactions on those platforms.

Deep Throat note:  At 91.2 billion transactions with US$14.3 Billion in associated GMV, this would put the GMV pre transaction at 15 cents each.  i.e.) More silly numbers prompting the question "exactly what's included in a transaction?". 

"On this topic, Jack Ma gave a surprising response: 'Double 11 will be here for a century, even if Alibaba itself is gone, Double Eleven will persist!'

"Today, the return rate from TMall and Taobao has already reached 64%,worth 57.4 bln RMB (USD$9.2 Billion) in amount returned, showing that as long as there are Taobao and TMall, there will be a lot of faked transactions.

"Industry sources say as long as there is Taobao there will be fake transactions. Take one example: If two online stores have the same products at roughly the same price, and one has made 1,000 sales and has a lot of positive reviews,while the other has just a few dozen purchases and so-so reviews, what choice will the customer make? You can believe that most customers will choose the store with more transactions and more reviews."

Caixin, the Beijing based media group, understandably, hasn't picked up this story yet, being under more government scrutiny .  The closest they've come to questioning the veracity of the numbers is to question whether "Singles Day" is really beneficial to the Chinese economy.

Of course, this is yet another source which is validating the content of this blog, as well as the questions posed by other news organizations Barron's (John Laing), Fortune (Jen Wieczner), Bronte Capital (John Hempton) , MarketWatch (Francine McKenna) , CNBC) as well as Gorgon Chang's prophetic article from 2014 citing estimates from the China Industry Research Network, Gartner and Barclays that Alibaba's GMV, as well as that of other eCommerce businesses, was roughly 25% overstated..  

I wouldn't be surprised if the Bowenpress estimates aren't at least directionally correct.  To beat the ever-higher figures from previous years and blow by analyst estimates, Alibaba would need to continually inflate their fake numbers.  There's a cottage industry that's been developed arrounf fake GMV.  It's probably becoming a core skill set!  

Question of the day:  What would happen if we found out that 64% of Walmart's or Amazon's sales are fake?  

I think I'll get on-line right now and start snapping up some of those Cyber-Monday deals!

Happy Holidays!

Original Bowenpress post URL
http://bowenpress.com/news/bowen_40416.html

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