Global Courant
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Chinese consumers bought billions worth of items at China’s first major online shopping festival after emerging from the pandemic as merchants slashed prices, but analysts say consumer confidence is still weak.
Chinese merchants offered customers hefty discounts during the 618 shopping festival, which ran from late May to June 18 on China’s major shopping platforms, hoping to boost sales amid a weaker-than-expected recovery in consumption.
Major shopping festivals, such as e-commerce retailers from JD.com 618 and that of Alibaba Bachelorette Dayare typically barometers of consumption in China, and Chinese e-commerce platforms often participate by offering consumers discounts and incentives.
Analysts say consumption will remain low this year as China emerges from the pandemic, even as platforms like JD.com, Tmall, Taobao and Pinduoduo have offered billions in subsidies.
“Chinese consumer confidence remains weak due to a mix of geopolitics, ongoing weakness from Covid-19 and domestic Chinese politics,” said Shaun Rein, founder and director of the China Market Research Group in Shanghai.
Rein said consumers were less likely to spend more in 618 as merchants had been heavily discounting for years due to the pandemic and deals weren’t much better compared to previous months.
In March, JD.com launched a “10 billion yuan grant program” to compete with rival Pinduoduo, which is known for its low-priced goods. The CEO of Alibaba’s e-commerce business unit, Trudy Dai, also previously pledged to make “huge, historic” investments to attract users to its platforms.
“For months, Chinese consumers have been price-conscious, looking for deals and trading across most product categories,” Rein said.
This year, for the first time, JD.com did not disclose its total sales figures for the 618 event, despite saying in a blog post that the 2023 shopping extravaganza had “exceeded expectations and set a new record.”
Not last year either alibaba neither JD.com revealed final numbers for Singles’ Day in November, amid muted festivities during Covid-19 and an expected slowdown in growth.
JD.com said in a blog post that consumers bought 10 times as many products during the 618 shopping festival as they did in March.
According to Jacob Cooke, CEO of e-commerce consultancy WPIC, categories such as cosmetics and luxury goods experienced stronger sales growth than in the previous quarter, despite generally weak consumption.
For this year’s 618 event, more luxury brands participated to boost sales in China after the industry declined for the first time in five years in 2022 amid China’s strict “zero Covid” policy and lockdowns that put pressure on retail spending to make.
Brands like Moncler and Lemaire took part in 618 on Tmall for the first time.
Many luxury brands also took the opportunity to launch new products online, with some offering rare discounts and other incentives such as interest-free payments in 12-month installments.
Brands like Burberry, Chloe and Miu Miu’s sales in the first 30 minutes of the 618 festival in late May were higher than total sales during the shopping festival a year ago, according to data from Tmall.
“Luxury coming back online is a big trend because that’s the category that’s been hit really hard by Covid-19,” Cooke said. “Some brands can see a tenfold increase in sales compared to last year.”
