The 11.11 Singles Day is around the corner. Popularised by Alibaba, they turned 11.11 into a day of shopping frenzy. In 2018, singles day generated more than $30.8 billion in sales in 24 hours alone. As a comparison, Black Friday 2018 in the US only raked in $6.2 billion in sales. The biggest shopping event in the world originated in China but as of now is becoming a global event which means that the total sales generated on this mega shopping day is expected to grow further. Consumers around the world will be hunting for great products selling at great prices. But as investors, we can also focus on finding great investment opportunities.
To make the greatest shopping festival in the world highly successful, there are many parties involved from the manufacturer, to the retailer, to the delivery company and etc. Understanding which party is involved allows us to seek out potential companies that will benefit from this shopping event. Firstly, in order for a great shopping sale to take place, there must be products to sell and the target customers are mainly consumers. Consumers behave very differently from businesses. Businesses look to reduce cost and improve efficiency. Consumers on the other hand, buys based on quality and brand loyalty. Therefore, it will be wise to take a look at companies that sells branded products and some that comes to mind are companies like Nike (NYSE: NKE) and Adidas (ETR: ADS). These companies have a huge base of loyal customers who are willing to spend huge amounts of money for their products. The singles day will just encourage these fans to purchase even more products from them.
Next on the supply chain are the marketplaces. To allow singles day to become a very scalable event, it is primarily launched online. Therefore online marketplaces such as Taobao (NYSE: BABA) , Tmall (NYSE: BABA), JD.com (NASDAQ: JD), Shopee (NYSE: SE), Lazada (NYSE: BABA) are expected to benefit massively from these events. Online marketplaces such as these generate their income by charging a commission on every sale. With a massive number of sale on 1 day alone, we can expect them to generate massive revenues. Some examples of such companies are Alibaba which owns Taobao, Tmall and Lazada, JD.com which is the largest online retailer in China, Baozun (NASDAQ: BZUN) which helps brands to go online in China, and SEA Group (NYSE: SE) which owns Shopee. However, it is not only the online marketplaces who will benefit, offline retailers also stand to benefit from such an event. Shopping malls can also take advantage by offering 11.11 day sales and promotions. Some mall Real Estate Investment Trusts (REITs) such as IGB REITs (KLSE: 5227), SUNWAY REIT (KLSE: 5176), and Pavillion REIT (KLSE: 5212) stand to benefit from this as well.
What about the last mile delivery? After you purchase something online, you will definitely need the product to be sent to you house right? Logistics companies are very aware of the biggest shopping event in the year and you can bet that they will do anything to be prepared for it. Global logistics companies such as FedEx (NYSE: FDX) and UPS (NYSE: UPS) are some stocks that you can consider. Singles Day is no longer a shopping festival in China but also around the world. Therefore, logistics companies these logistic companies that operate globally will definitely have a bigger market opportunity to serve. But that does not mean local logistics companies do not stand a chance. In Malaysia, companies such as POS Malaysia (KLSE: POS) and GD Express (KLSE: GDEX) will definitely see a surge in delivery volume during singles day itself. This is because most of the time, they will be either handling local packages entirely or they will be handling the last mile delivery if the product is sent in from overseas.
However, the list does not stop there. If you purchase something online, it is highly unlikely that you will purchase them with physical cash. Instead, you will be paying through you E-Wallets, credit cards or debit cards. When you pay for products online through these methods, you will need a payment processor to process your payments. Alipay (NYSE: BABA) and Wechat Pay (HKG: 0700) are some of such E-wallet provider. They also serve as payment processors. These companies belong to Alibaba and Tencent respectively. Payment processors charges a fee for every transaction they have processed. During the Singles day in 2018, Alipay recorded 1.5 billion transactions in 1 day alone. The number of orders peaked at about 325,000 orders per second and all that through Alibaba’s platforms alone. We have not considered all the other E-commerce websites. VISA (NYSE: V) and Mastercard (NYSE: MA) will definitely benefit during the global shopping event as well. Some Malaysian companies that will benefit in the payment processing space is GHL Systems (KLSE: GHLSYS) and Revenue Group Berhad (KLSE: REVENUE). Revenue stands to benefit more from the festival as they have close ties to the Taobao website and are also the payment processor for Lazada.
In a nutshell, Alibaba created a wonderful global shopping phenomenon and rebranded what was originally a depressing day in China into one of the most celebrated days for companies to potentially generate huge sums of revenues. We simply need to switch our minds from looking at it from a consumer’s point of view to an investor’s point of view. By doing this one thing alone, we can uncover an ocean of investment opportunities waiting for us to take advantage of.
Disclaimer: All facts and opinions presented are for educational purposes only. This is not a recommendation to buy or to sell. The author involved in the writing of this message has no vested interest in the companies. Please consult a professional for expert financial or other assistance or legal advice.
This article was written by Team VIC
Team VIC is formed by experienced and well-trained individuals from Value Investing College (VIC). The team has been consistently studying the latest stocks market trend in order to focus on educating the layman on investment principles and techniques.