Consumption Soft Even Amid Deep Discounts During Major China Shopping Festival, Analysts Say
Chinese consumers snapped up billions of dollars’ worth of items in China’s first major online shopping festival after emerging from the pandemic as merchants slashed prices, but analysts say that consumer confidence still remains weak.
Chinese merchants offered customers steep discounts during the 618 shopping festival, which ran on China’s major shopping platforms from the end of May until June 18, in the hopes of shoring up sales amid a weaker-than-expected recovery in consumption.
Major shopping festivals, like e-commerce retailer JD.com’s 618 and Alibaba’s Singles’ Day, are typically barometers of consumption in China, and Chinese e-commerce platforms often participate by offering discounts and incentives to consumers.
Analysts say that consumption remains soft this year, even as platforms including JD.com, Tmall, Taobao and Pinduoduo offered billions in subsidies.
Shaun Rein, founder and managing director of the China Market Research Group in Shanghai, said that consumers were less likely to spend more during 618 as merchants had already been discounting heavily for years because of the pandemic, and deals were not that much better compared to previous months.
In March, JD.com launched a “10-billion-yuan subsidies” 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 down across most product categories,” Rein said.
This year, for the first time, JD.com did not reveal its total sales numbers for the 618 event, despite saying in a blog post that the 2023 shopping extravaganza had “exceeded expectations, setting a new record.”
JD.com said in a blog post that during the 618 shopping festival, consumers snapped up 10 times the number of products that were eligible under its “10-billion-yuan subsidies” program, compared to March.
Despite overall soft consumption, categories like cosmetics and luxury goods saw a bigger uptick in sales compared to the previous quarter, according to Jacob Cooke, CEO of e-commerce consultancy WPIC.
For this year’s 618 event, more luxury brands took part as they sought to boost sales in China after the sector in 2022 declined for the first time in five years.
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 payment in instalments over 12 months.
Brands like Burberry, Chloe and Miu Miu’s sales in the first 30 minutes of the 618 festival at the end of May had exceeded its total sales during the shopping festival a year ago, according to Tmall data.
“Luxury coming back online is a big trend,” said Cooke. “Some brands may see up to a 10-fold increase in sales over last year.”
JD.com sales during China shopping festival better than expected -analysts
From: Reuters
Sales on JD.com e-commerce site during China’s mid-year shopping festival grew more than expected, brokerages said.
JD.com saw sales rise 6-8% over the 618 festival period that ran from late May through to Sunday evening, according to a client note from Citi analysts. That beat Citi’s expectations of 2-5% growth.
That estimate was, however, still less than 10.3% growth for JD.com’s gross merchandising value (GMV) logged last year and 27.7% growth in 2021.
The festival, named after the founding date of JD.com but embraced by all e-commerce platforms, is a key barometer of Chinese consumer spending.
JD.com has said it will not release its GMV figures for the festival period this year, only noting that sales hit a record - a milestone which was expected. Alibaba has also stopped releasing GMV figures for the so-called Singles Day shopping festival period in November in the face of slowing sales.
The festival period this year was marked by fierce competition, with platforms offering billions of yuan in coupons and subsidies to entice Chinese consumers to spend.
Retail sales climbed 12.7% in May, missing a consensus estimate of 13.6% growth and slowing from 18.4% growth in April.
Goldman Sachs analysts said in a client note said JD.com sales during 618 “slightly” exceeded expectations, while Jefferies analysts said the event “surpassed expectations and set new records.” Neither provided numerical estimates.
生词记录
snap sth up 抢购一空
merchant 商人，批发商
slash 大幅削减，大幅减少
steep 大起大落的；陡峭的
shore sth up 支撑，改善，提高
retailer 零售商
barometer 晴雨表，标志，指标
incentive 刺激，激励
subsidies 补贴，津贴
rival 竞争对手；比得上
pledge 承诺，保证；保证给予；抵押；誓言，诺言
price-conscious 价格敏感的
trade down 买更便宜东东西
extravaganza 盛大表演
exceed 超过，超出
eligible 合格的，有资格的；合适的
cosmetics 化妆品，美容品；装饰门面的，表面的
uptick 增长，发展，上升
consultancy 咨询公司，咨询服务
interest-free 无息
instalment 分期付款
brokerage 经纪商
gross 令人不快的，令人恶心的；严重的，极端的；毛的，总的，总共，全部
milestone 里程碑，转折点，重大事件
coupon 优惠券
entice 诱惑，诱使
consensus 一致的意见，共识
surpass 优于，超过
