China’s 618 festival saw its first sales decline in 8 years

China’s annual 618 festival – an e-commerce-driven shopping frenzy that runs until June 18 – saw sales decline this year for the first time in at least eight years.

JD.com created the shopping festival in 2010, and the name and date of the festival coincide with the company’s launch date: June 18, 1998. The 618 festival was originally a way for JD.com to try to compete with rival Alibaba, which launched another major Chinese event shopping – Singles’ Day, also known as Double 11 – in 2009.

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Since then, both Singles’ Day and the 618 festival have grown astronomically, with shoppers planning their shopping around the holidays the same way other marketplaces might plan around Amazon Prime Days, Black Friday or Cyber ​​Monday. Even though these two shopping events started with just two companies, all major Chinese e-commerce players are now participating in the unofficial festivities.

The festival’s gross volume (GMV), which tracks the value of items sold on e-commerce platforms, was 742.8 billion yuan ($102.3 billion) this year, according to estimates from data analytics firm Syntun, which tracks 618 performances annually. ). That’s down from 798.7 billion yuan ($110 billion) in 2023, a decline of almost 7 percent.

Syntun told CNBC that since it began tracking 618 metrics in 2016, this was the lowest sales decline.

Despite Syntun’s gloomy estimates, JD was quick to boast that this year’s 618 brought “a new record in both transaction and order volumes.” The company launched 618 promotions at the end of May this year, opting for a longer promotional window to allow consumers to place a deposit on specific products and complete purchases during the festival days.

Rival Alibaba did the same for its Tmall and Taobao platforms.

While JD thought its holiday performance was strong, Syntun data shows Alibaba-owned Tmall captured more GMV volume, leaving JD in second place. Pinduoduo from PDD Holdings took third place. Syntun considers these three platforms, as well as several others, to be “traditional” e-commerce platforms, which it says contributed 571.7 billion yuan ($78.7 billion) in total GMV this year. Last year, the same group of traditional platforms posted GMV of 614.3 billion yuan ($84.6 billion), Syntun said.

Meanwhile, live streaming platforms such as TikTok, Kuai Shou and Dian Tao achieved GMV of 206.8 billion yuan ($28.5 billion). TikTok led in live shopping market share by 618 people.

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Syntun described the live streaming sector’s performance as “brilliant,” which can be attributed to the fact that live streaming has been the only e-commerce subcategory to have seen significant growth over 618 years. Last year, live streaming GMV was 184.4 billion yuan ($25.4 billion).

Despite some increase in the number of live broadcasts, the overall decline in viewership of this year’s 618 festival may be cause for concern. Even during the Covid-19 pandemic, GMV has increased due to the 618 festival, so seeing this decline could spell trouble for a market that is already struggling with a lower-than-desirable long-term economic outlook.

In late May, the International Monetary Fund said that while it expects China’s economy to grow at a rate of 5 percent this year by 2029, growth may have slowed to just over 3 percent, a byproduct of an aging population and a worsening situation. the housing and real estate sectors are struggling.

Even if Chinese consumers begin to lose interest in e-commerce giants like JD and Alibaba, other markets will show some desire for cheap goods in the face of inflationary pressures. In turn, some Western customers have started buying more on e-commerce platforms such as Temu, Shein, Alibaba and others. Salesforce predicted that these and other platforms could handle 21 percent of vacation spending in the West this year.

Singles’ Day, which falls annually on November 11, could indicate whether Chinese consumers will regain their obsession with ultra-low offers from e-commerce providers as Western consumers increase their consumption of high-value items.