By Casey Hall and Sophie Yu
SHANGHAI (Reuters) – China’s mid-year e-commerce sales festival has failed to generate much excitement among shoppers, industry experts say, even as major platforms extended their offers to a period of weeks to attract consumers amid of a bleak economic outlook.
The 618 Festival, named after e-commerce provider JD.com’s June 18 founding date but embraced by all platforms, is China’s second-largest annual sales event after Singles Day in November and a key test of household consumption appetite .
A weak sales performance during the festival would signal further challenges facing the world’s second-largest economy, which is already struggling with a protracted real estate crisis and high unemployment.
“With discounts available year-round, the buzz around 618 has waned,” said Jacob Cooke, CEO of e-commerce consultancy WPIC Marketing + Technologies.
“But the festival is still generating GMV lift from baseline and overall GMV should increase slightly from 2023,” he said, referring to gross merchandise volume, a commonly used measure of e-commerce’s online sales commerce companies.
JD.com said on Wednesday that sales and order volumes reached a new high during the festival period, which ran from late May to June 18 this year. The company did not elaborate on the exact growth rate of its orders or sales during the festival, which first launched in 2010 as just a one-day sale.
Data from consultancy Syntun last year showed that the combined GMV on major e-commerce platforms for the period of 618 festivals totaled 614.3 billion yuan ($85.79 billion), up 5.4% from 2022. Analysts expect broadly similar levels of growth this year.
Major players such as JD.com and Alibaba’s Tmall and Taobao platforms this year canceled a traditional pre-sale period in which shoppers could make deposits on products and complete the purchase during a later sale period. Instead, the sales period itself was extended.
That extension, combined with the broader tightening of China’s consumer belt, which is pushing retailers to continually focus on low prices, also contributed to 618 garnering less enthusiasm than the event once enjoyed, analysts said.
An analysis by consultancy Re-Hub of luxury brands’ discount strategies during this year’s 618 festival found that almost half of the brands they tracked maintained or reduced their average discounts from the previous year, while 20% reduced their average discounts increased.
HOUSEHOLD APPLIANCES AND BEAUTY PRODUCTS
Alibaba had previously said in a mid-618 seasonal update that sectors such as home appliances were performing better on its platforms, led by brands such as Haier and Xiaomi.
The e-commerce giant said on Wednesday that international brands including Nike, L’Oréal, Lancome and Adidas surpassed 1 billion yuan ($137.82 million) in sales on Tmall during the period.
Apple offered discounts of up to 2,300 yuan ($318) on select iPhone models through its flagship store Tmall in a bid to keep pace with domestic rival Huawei.
Within the first hours of the sale, Alibaba said Apple had sold more than 200 million yuan worth of merchandise.
Rival PDD Holdings’ Pinduoduo, which traditionally does not make 618 sales data public, did not immediately respond to a request for information.
Because low prices are now such a common feature of the Chinese consumer landscape, it is becoming increasingly difficult for e-commerce platforms to keep customers engaged, even during traditionally successful sales festivals.
“To be honest, I haven’t paid constant attention to 618 because there are so many (shopping festivals),” said Anita Meng, a university student from Hangzhou.
“Even if these festivals still happen, my wallet is already exhausted,” she said, adding that she made only one purchase this 618: a gaming chair for her older brother that was reduced from more than 1,200 yuan to 1,000 yuan ($138) . .
($1 = 7.2559 Chinese Yuan Renminbi)
(Reporting by Casey Hall in Shanghai and Sophie Yu in Beijing; Editing by Miyoung Kim and Jamie Freed)
