According to third-party data, China’s top e-commerce platforms saw gross merchandise value (GMV) grow 13.6 percent year-on-year during the 618 shopping festival, although profit margins are likely to come under pressure due to a heated price war.
The estimated GMV growth, published Thursday in a report from research firm Analysys, includes sales on China’s largest online shopping platforms: Alibaba Group Holding’s Taobao and Tmall, JD.com, Pinduoduo, ByteDance’s Douyin and rival short-video platform Kuaishou.
Newer e-commerce challengers appear to have greater momentum than Alibaba and JD.com, the two long-standing players in the domestic market. Alibaba owns the South China Morning Post.
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Douyin, the Chinese version of TikTok, led all other platforms with a 26.2 percent increase in GMV, followed by Pinduoduo’s 17.7 percent and Kuaishou’s 16.1 percent. Alibaba and JD.com saw GMV grow 12 percent and 5.7 percent, respectively, according to Analysys.
Workers sort packages at an express logistics company in Huzhou, eastern Zhejiang province, on June 18, 2024. Photo: Xinhua alt=Workers sort packages at an express logistics company in Huzhou, eastern Zhejiang province, on June 18, 2024. Photo: Xinhua >
The companies have largely stopped publishing their own GMV figures for major shopping festivals, including for this year’s 618 event. However, Analysys’ figures are consistent with the growth story evident from the limited figures that companies have released this year.
JD.com said Wednesday that transaction volume and orders during the mid-year sales extravaganza broke records, without disclosing the exact figures.
Taobao and Tmall’s GMV also recorded a new high during the campaign period through June 18, according to people familiar with the matter.
“The gap between online growth and overall retail sales growth has gradually widened, indicating that the driving force behind online consumption is significantly stronger than offline consumption,” Analysys said in the report.
“Although there is no clear trend of consumption down this year, consumers are generally more rational in their spending habits,” said Joyce Ju, vice president of Greater China Internet Research at BofA Securities.
Ju noted that some categories such as clothing and home appliances have shown weaker online sales, while segments such as online food delivery remain more resilient.
Despite GMV’s growth, many merchants have complained that profits are falling due to a brutal price war that has emerged as platforms compete to attract price-conscious consumers in a slowing economy.
Zuoliang – a domestic brand that sells bird’s nest soup, a Chinese cuisine, on JD.com – said in a social media post on Thursday that it was “forced to sell at a price even lower than our cost” during the 618 event. , creating an “unprecedented dilemma”.
Other brands have also publicly complained about losses on their goods, including clothing and appliances.
A livestreamer sells products online from Longquan Township in southwestern Guizhou province on June 18, 2024. Photo: Xinhua alt=A livestreamer sells products online from Longquan Township in southwestern Guizhou province on June 18, 2024. Photo: Xinhua>
Traders have tried to take a more rational sales approach this season 618, but platform operators have become more aggressive in providing cash subsidies and discounts to consumers, according to BofA’s Ju.
“E-commerce platforms are placing more emphasis on price competitiveness than ever before, aiming to protect and regain market share amid increasing industry competition,” said Ju.
Pinduoduo reportedly introduced an “automated price tracking system” that allowed traders to quickly adjust prices online during the 618 event. According to recent Chinese media reports, Douyin has also tested a smart pricing system for traders.
During the event, e-commerce package delivery rates grew 23 percent year-over-year, faster than GMV growth, primarily due to higher return rates and a potential year-over-year decline in value per order, reflecting more conservative consumer behavior. This is evident from a research note from HSBC on Thursday.
Jessie Li, a 30-year-old from Shanghai, said she spent nearly 4,000 yuan at this year’s sales event. This year, however, she chose to buy “obviously cheaper” brands that she wouldn’t have bought a few years ago. Many of these are domestic brands that offer similar quality at lower prices, she said.
“After my boss cut my quarterly bonus last year, I had no choice but to become much more price sensitive,” Li said.
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