China's Mid-Year Online Sales Festival Marked by Flat Outlook

Analysts said China’s mid-year e-commerce sales festival failed to excite shoppers this year, despite offers that ran for weeks.

The event, known as the 618 festival, because June 18 was the founding date of e-commerce platform JD.com, appeared to have suffered from the downbeat economic outlook among consumers.

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

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A weak sales performance during the festival would indicate further challenges facing the world’s second-biggest economy, which is already grappling with a prolonged property crisis and high unemployment.

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

“But the festival is still generating a GMV bump from baseline and overall GMV should be up slightly from 2023,” he said, referring to gross merchandise volume, a widely used proxy for e-commerce firms’ online sales.

JD.com said on Wednesday its turnover and order volumes reached a new high over the festival period, which ran from the end of May to June 18 this year. It did not elaborate on the exact growth rate of its orders or sales during the festival, which was first launched in 2010 as just a one-day sale.

Longer sales period as consumers cut spending

Data from consultancy Syntun last year showed the combined GMV on major e-commerce platforms for the 618 festival period totalled 614.3 billion yuan ($85.79 billion), up 5.4% from 2022. A similar level of growth is broadly expected by analysts this year.

Major players such as JD.com and Alibaba‘s Tmall and Taobao platforms this year cancelled a traditional pre-sale period in which shoppers could place deposits on products and complete the purchase during a later sales period. Instead, the sales period itself was extended.

That extension, combined with China’s broader consumer belt tightening, which is pushing retailers to constantly focus on low prices, also contributed to 618 garnering less enthusiasm than the event once enjoyed, analysts said.

An analysis by consultancy Re-Hub of luxury brand discounting strategies during this year’s 618 festival found nearly half of the brands they tracked either maintained or reduced their average discounts from the previous year, while 20% increased their average discounts.

Big iPhone price cut

Alibaba had previously flagged in a mid-618 season update that sectors such as home appliances were outperforming on its platforms, led by brands such as Haier and Xiaomi.

The e-commerce giant said on Wednesday that international brands including Nike, L’Oreal, Lancome and Adidas surpassed 1 billion yuan ($137.82 million) of sales on Tmall during the period.

Apple offered discounts of up to 2,300 yuan ($318) on select iPhone models via its Tmall flagship store in a bid to keep pace with domestic competitor Huawei.

Within the first hours of sales, Alibaba said Apple had sold more than 200 million yuan of merchandise.

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

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

“I haven’t been paying constant attention to 618, to be honest, because there are just so many (shopping festivals),” said Anita Meng, a university student from Hangzhou.

“Even if these festivals are still going strong, my wallet is already exhausted,” she said, adding she only made one purchase this 618 – a gaming chair for her older brother that was reduced from more than 1,200 yuan to 1,000 yuan ($138).