China Daily Global Edition (USA)
618 shopping festival shows Chinese economy’s resilience
Platforms offer discounts, coupons, embrace livestreaming to boost consumption
Chinese consumers have enthusiastically unleashed their massive buying power during this year’s 618 Midyear Shopping Festival — an 18-day e-commerce extravaganza launched by JD in China 17 years ago — which has promoted the rapid recovery of consumption and displayed the strong resilience of the economy.
During the festival, major e-commerce platforms accelerated efforts to offer steep discounts, shopping coupons and the use of livestreaming product promotions to shore up an economy hard hit by the novel coronavirus pandemic.
JD reported that its sales during the nearly three-week-long period reached a staggering 269.2 billion yuan ($38 billion), an increase of 33.6 percent compared with 201.5 billion yuan a year ago. Alibaba Group’s Tmall platform saw its accumulated sales during the shopping carnival from June 1 to June 18 reach 698.2 billion yuan.
JD saw its sales from JD Super — its online supermarket — surge 500 percent in the first 10 minutes of trading on June 18, compared with the same period last year, with more than 2,000 brands witnessing their transaction volume jump 100 percent year-on-year.
JD’s sales of televisions on June 18 surpassed 100 million yuan in just 31 seconds, while air conditioners worth more than 500 million yuan were sold in two minutes. The transaction volume of refrigerators and washing machines surpassed 500 million yuan in just three minutes. Apple’s products notched up more than 100 million yuan in sales within five seconds.
In addition, turnover of personal care products witnessed a sixfold increase within the first minute after the clock struck midnight on June 18, and sales of pet goods rose by 12 times on a yearly basis. Sales in the luxury products category skyrocketed by 500 percent within the first 10 minutes, JD said.
Ling Chenkai, vice-president of JD and head of strategy of JD Retail, said: “We have the responsibility and obligation to both restore consumer confidence and unlock their desire to shop at the same time.”
It is noteworthy that young consumers in third to sixth-tier cities witnessed the most rapid growth during this year’s 18-day promotion, while middle-aged and elderly shopping activity in bigger cities increased dramatically, driven by the consumption of perishables.
Carol Fung, president of JD’s fastmoving consumer goods omnichannel, said sales of customized commodities in the first four hours on June 1 surpassed full day sales of June 1 last year, and sales in lowertier markets in the first 12 hours increased by 160 percent compared with the same period last year.
Over 40 brands sold over 100 million yuan worth of goods on June 1, indicating a comprehensive recovery and a sharp rebound in some categories, said Lu Fei, a senior analyst from JD Big Data Research Institute.
JD also cooperated with shortvideo platform Kuaishou to launch the first big promotional event via the latter on June 16, when celebrities and over 100 well-known Kuaishou key opinion leaders offered steep discounts and coupons to sell products via livestreaming. Some 1.42 billion yuan worth of products were sold via live broadcasting on that day.
The two companies signed a strategic partnership with a focus on supply chains on May 27. Kuaishou users will be able to purchase JD’s products without leaving the app, and enjoy fast delivery and aftersales service offered by JD.
The 618 Mid-year Shopping Festival has become the second-largest shopping event in China, next to Alibaba Group Holding Ltd’s Singles Day 24-hour shopping blitz on each Nov 11.
JD Daojia, the on-demand retail platform of Dada Group, saw its sales revenue surge 138.8 percent year-on-year from June 6 to June 14. Between June 1 and June 14, delivery orders from Dada Now, a leading on-demand delivery platform, increased by 73.4 percent compared with the same period last year.
“This year’s June 18 campaign is the first national online promotion event since the pandemic erupted. More and more consumers are keen on online purchases since the COVID-19 outbreak, which has cultivated more online shoppers and reshaped the shopping habits of consumers,” said Barbara Shi, vicepresident of e-commerce at market research firm Nielsen China.
She is optimistic about the prospects of online shopping as the epidemic wanes in China, saying enterprises will beef up efforts in digital transformation and provide more products and services via e-commerce sites and online-to-offline or O2O platforms.
“In the short term, the 618 Midyear Shopping Festival will promote the rapid recovery of consumption, bolster the confidence of shoppers and create a better consumption atmosphere,” said Zhao Ping, director of the international trade research department at the China Council for the Promotion of International Trade.
Unlike previous years, Alibaba Group Holding Ltd is empowering more smaller merchants, especially those previously engaged in export activities, to be part of the 618 Midyear Shopping Festival.
The company said recently that the number of SMEs participating in the sales gala jumped 166 percent this year compared with 2019. Export enterprises also saw transaction volume surge 71 percent on Taobao during the pre-sales phase.
This is in part due to an Alibaba initiative announced in April to help foster 10 digitalized manufacturing clusters and help 1,000 factories generate over 100 million yuan each in sales.
Vendors in categories including clothing and textiles saw sales triple in the lead-up to the campaign. They pointed to perks like zero to low interest rate loans and a lowered threshold for opening up online stores as the primary factors fueling that growth.
This goal will be achieved partly through the company’s consumerto-manufacturer strategy, which taps digital resources such as data insights and AI algorithms to help factories operate more efficiently and serve consumers more effectively.
Alibaba helped merchants of wormwood, a Chinese herb with medicinal efficacy, sell the product to over 80 countries prior to June 18. Outbound sales jumped 50 percent year-on-year via Tmall’s overseas channels.
Song Xin, owner of a wormwood store in Nanyang, Henan province, said its sales in the past two months almost doubled compared with previous years, and monthly transaction volume stabilized at 30 million yuan.
While running e-commerce platforms, Alibaba is also eyeing the empowerment of brick-and-mortar stores by promoting products and discounts online that redirect users to shop offline.
At Shanghai’s Yuyuan Garden, sales between June 1 and June 3 jumped 157 percent compared with the same period of May (which happened to fall within the May Day holiday), with revenue from a particular liquor expanding seven times.
Harbin’s Central Avenue, which brings together a number of timehonored brands, saw daily transactions jump 84 percent since June 1 compared with the previous month. The business community leveraged livestreaming events on Taobao to promote sales and offer discounts exclusive to the 618 Mid-year Shopping Festival.
“Sales almost doubled during this year’s campaign compared with our conventional sales level, with Tmall helping us open up new sales and marketing channels online,” said Nan Yafei, who is responsible for the Tmall store of Central Avenue. “This is extraordinary, especially as most offline businesses were hit hard by the pandemic.”
Due to COVID-19, this year’s campaign featured simplified promotions and more innovative ways of selling such as livestreaming, said Chen Wen, principal at consultancy Oliver Wyman.
“There were more discounts. Retailers want consumers to focus on choosing the right products. Brands that previously didn’t participate in such events will also join the game as they’ve been hit hard during the pandemic,” said Chen.
But Chen said the actual impact on overall consumption remains unclear. “Many consumers are just stocking up on daily groceries during this period, so there is no extra or pent-up consumption, it’s just consumption in advance for the following period,” he said. “Besides, due to the pandemic, many people are concerned about their future income.”
The 618 Midyear Shopping Festival, just like Double 11, has become a new normal in China’s retail ecosystem, meaning that gaining traction is becoming more difficult but merchants have to be part of it.
“It’s probably like the CCTV’s Chinese Lunar New Year gala show — everyone knows it will come and expects something new, but there’s just less passion. If a brand or a retailer wants to be successful during the event, one needs to make good use of the showroom for new products, new technology and new incentives for consumers,” he said. “It will be more and more difficult, but it’s a must.”