China’s semi-annual online sales festival marked by a flat forecast

Analysts say China’s mid-year e-commerce sales festival has failed to excite customers this year, despite offers that have been pouring in for weeks.

The event, the so-called 618 festivalsince June 18 was the founding date of e-commerce platform JD.com, it seemed to suffer from a worsening economic outlook among consumers.

The festival, which includes all platforms, is China’s second-biggest annual sales event after November’s Singles’ Day and a key test of household consumption appetite.

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Poor sales during the festival would point to further challenges for the world’s second-largest economy, which is already grappling with a prolonged real estate crisis and high unemployment.

“With discounts available year-round, the hype around 618 has died down,” said Jacob Cooke, CEO of e-commerce consultancy WPIC Marketing + Technologies.

“However, the festival continues to generate GMV growth compared to its baseline, and overall GMV is expected to increase slightly from 2023.” – he said, referring to gross merchandise volume, a commonly used indicator reflecting online sales of e-commerce companies.

On Wednesday, JD.com said its sales and order volumes reached new highs during the festival period, which ran from late May to June 18 this year. He did not provide exact growth rates in orders or sales during the festival, which first began in 2010 as a one-day sale.

Longer sales period as consumers cut back on spending

Data from consulting firm Syntun last year showed that total GMV on major e-commerce platforms during the 618 festival period was 614.3 billion yuan ($85.79 billion), up 5.4% from 2022. Analysts generally expect a similar level of growth this year.

Major players such as JD.com and AlibabaTmall and Taobao this year canceled the traditional pre-sale period in which buyers could place a deposit for products and complete the purchase later in the sale period. Instead, the sales period itself was extended.

Analysts say this extension, combined with a wider consumer belt tightening in China that is forcing retailers to continually focus on low prices, also contributed to the 618 show being met with less enthusiasm than before.

An analysis by consultancy Re-Hub of discount strategies for luxury brands at this year’s 618 Festival found that almost half of the brands it tracked maintained or reduced their average discounts from the previous year, while 20% increased their average discounts.

Big iPhone price reduction

Alibaba previously noted in its 618 mid-season 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 Wednesday that international brands including Nike, L’Oreal, Lancome and Adidas surpassed 1 billion yuan ($137.82 million) in sales on Tmall during the period.

To keep up with domestic competitor Huawei, Apple has offered discounts of up to 2,300 yuan ($318) on select iPhone models through its flagship Tmall store.

Alibaba said Apple sold more than 200 million yuan worth of goods in the first hours of sales.

Rival PDD Holdings’ Pinduoduo, which traditionally does not share 618 sales data, did not immediately respond to a request for information.

With low prices now such a common feature of China’s consumer landscape, it’s becoming increasingly difficult for e-commerce platforms to keep customers engaged, even during traditionally successful sales festivals.

“To be honest, I haven’t paid attention to 618 all the time because there are just too many of them (shopping festivals),” said Anita Meng, a university student from Hangzhou.

“Even if these festivals are still very popular, my wallet is already exhausted,” she said, adding that she has only made one purchase of this 618 model – a gaming chair for her older brother that has been reduced in price from over 1,200 yuan to 1,000 yuan ($138). .

• Reuters with additional editing by Jim Pollard

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