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Chinese consumers bought billions worth of items at China’s first major online shopping festival after weathering the pandemic as retailers slashed prices. However, analysts say consumer confidence is still weak.
Chinese retailers offered significant discounts to customers during the 618 Shopping Festival, which ran from late May to June 18 across China’s main shopping platforms, hoping to boost sales amid a weaker-than-expected recovery in consumption.
Big shopping festivals like e-commerce retailer JD.com’s 618 and Alibaba’s Singles’ Day tend to be a barometer of consumption in China, and Chinese e-commerce platforms often get involved by offering consumers Offer discounts and incentives.
Analysts say consumption remains weak this year as China emerges from the pandemic, even as platforms including JD.com, Tmall, Taobao and Pinduoduo have offered billions of dollars in subsidies.
“Chinese consumer confidence remains weak due to a mix of geopolitics, ongoing weakness from Covid-19 and Chinese domestic politics,” said Shaun Rein, founder and chief executive of the China Market Research Group in Shanghai.
Rein said consumers were less likely to spend more in 618 because retailers had been discounting heavily 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 subsidy program” to compete with competitor Pinduoduo, known for its low-priced goods. Trudy Dai, CEO of Alibaba’s e-commerce business unit, also previously vowed to make “huge, historic” investments to attract users to its platforms.
“For months, Chinese consumers have been price-conscious, looking for bargains and offering discounts in most product categories,” Rein said.
This year, for the first time, JD.com did not disclose its total sales figures for the 618 event, although it said in a blog post that the 2023 shopping extravaganza “surpassed expectations and set a new record.”
Last year, neither Alibaba nor JD.com released final numbers for November’s Singles’ Day amid muted celebrations during Covid-19 and an expected slowdown in growth.
JD.com said in a blog post that consumers bought 10 times more products eligible under the “10 billion yuan subsidy program” during the 618 Shopping Festival compared to March.
According to Jacob Cooke, CEO of e-commerce consultancy WPIC, categories like cosmetics and luxury goods saw a larger increase in sales compared to the previous quarter, despite overall weak consumption.
More luxury brands attended this year’s 618 event to boost sales in China after the sector closed in 2022 for the first time in five years due to China’s strict “zero-Covid” policy and lockdowns, which weighed on retail spending , was declining.
Brands like Moncler and Lemaire participated in the 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 installments over 12 months.
According to Tmall data, sales of brands like Burberry, Chloe and Miu Miu in the first 30 minutes of the 618 festival in late May surpassed total sales during the shopping festival a year ago.
“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 are seeing up to a 10x increase in sales compared to last year.”