China’s e-commerce giant makes most of its money from its advertising, not online marketplace seller commissions.

(Bloomberg Gadfly)—As far as manufactured annual celebrations are concerned, Singles’ Day is up there with the best of them in terms of commercialization and irrelevance.

That hasn’t stopped media and analysts covering the event as though it were the Super Bowl of online shopping. At least that other over-hyped yearly occurrence, Valentine’s Day, has some semblance of historical relevance (he was a saint).

For those grappling to tie Alibaba Group Holding Ltd.’s 24-hour shopping bonanza to actual revenue at the Chinese e-commerce company, don’t bother. Global merchandise volume for its payments provider Alipay is the headline figure flashed onto giant screens and bandied about in press releases. I’ve already discussed how useless GMV is as a financial metric, and Alibaba later agreed by dropping it from financial reports.

Comparing Singles’ Day data with Alibaba revenue proves this point.

The 60% growth in Alipay Singles’ Day GMV back in 2015 stands as a record to this day. Yet, Alibaba’s revenue for the fiscal third quarter climbed just 32% that year, the slowest pace in the past five years. The reverse is also true: 54% sales growth last year, the second fastest since 2013, occurred when Singles’ Day GMV climbed a mere 32%, the slowest rate of the past four years.


Shopping via cellphones, called Mobile GMV in Alibaba parlance, is another fascinating data point: More than 90% of Singles’ Day transactions are now done on the go. Alibaba loves trotting out this metric every year, and we love reading it as if it means a lot. But it doesn’t.

If there’s anything to be said for mobile-commerce data, it’s that providing consumers an experience that removes friction from the shopping process is more likely to result in a completed sale. Generally, that’s a good thing (for shareholders, maybe not consumers). No longer needing a customer to sit down and boot up a PC to make a purchase tends to boost transaction volumes. A more mobile user base has also resulted in better average revenue per user, as I discussed back in August, though we need to remember that ARPU and GMV are not the same.

This difference is crucial, and again speaks to the importance of mobile and the irrelevance of GMV, because despite its label as being China’s largest e-commerce giant, Alibaba actually makes most of its revenue from advertising. Just 18% of its China commerce revenue last quarter came from commissions. Almost 50% flowed from what it calls customer management, which refers to an ad-driven division that gets paid by luring would-be shoppers to click on a client’s promo.

Furthermore, customer-management revenue is climbing faster than commissions as Alibaba leverages its data and technology platforms, especially on mobile.

That’s why for all its transaction data, Singles’ Day isn’t about investors. It’s purely marketing hype designed to convince e-commerce merchants to jump on board and buy ads, lest they miss out. By publicizing ever bigger (but probably irrelevant) GMV numbers, Alibaba isn’t selling itself to shoppers or shareholders. It’s pitching to sellers who need to be convinced the pie is getting bigger and they should pay more to get a slice.


This column does not necessarily reflect the opinion of Bloomberg LP and its owners.