China's 618 shopping festival is in the books. This year's three-week event was watched closely for evidence that the Chinese consumer will help spend the country out of the pandemic, and the success of 618 shows that they likely will.
According to retail metrics firm Syntun, during the three-week period (from Jun. 1 to Jun. 18), China’s online gross merchandise volume (GMV) reached RMB 457.33 billion, a 43.78 percent jump over the prior year. Domestic appliances, which were partially subsidized by the government, led the way with RMB 62 million in sales, followed by mobile phones at RMB 46 million.
618 definitely moved the needle through its cooperation with the government and various business models found within the festival. Some of it represented pent-up demand on behalf of the Chinese consumer. Analysts worry that it was too much, too soon as the Chinese economy looks at the rest of the year, especially the Alibaba-sponsored Singles Day on 11/11.
“The second half of the year is not likely to see such a strong recovery,” said Charlie Chen, head of the investment bank China Renaissance, in an S&P Global report. His fears include rising unemployment, trade tensions and a possible second wave of infections.
The slowdown is unlikely to be seen across all categories. Data from Azoya shows that the health, beauty, maternity and baby segments have been relatively stable over the past few months.
On-demand delivery and retail platform Dada Group reported excellent results, mainly by partnering with brands like Walmart, Yonghui, CR Vanguard, AEON, BBK, Lotus, Bailian Group and Olé to run sales promotions on its platform. eCommerce sales for Dada’s eCommerce platform, JDDJ, increased by 138.8 percent from June 6 to June 14, compared to the same period in 2019.
During the festival, JDDJ held several live-streaming events across sectors including food, medicine, beauty products and more. “To close the festival, JDDJ hosted a seven-hour live broadcast show on June 18, and the first order was delivered to an audience member just 12 minutes after the show began,” the company noted.
The two Chinese eCommerce giants, JD.com and Alibaba, also pulled in record numbers from the digital festival. Together, their total sales were $136 billion, with Alibaba bringing in around $98 billion and JD.com responsible for $38 billion – a spike of 33 percent over last year. Alibaba earned $38 billion during the Singles Day holiday last year, which doubled the combined sales in the U.S. on Black Friday and Cyber Monday last year.
Analysts were also watching the festival for signs that Alibaba and JD.com could be unseated as eCommerce kings, or that they might lose market share. According to a study by China Merchants Securities that focused on daily active user data and gross merchandise value in April and May, Pinduoduo was leading the recovery in Chinese online sales, trailed by JD.com and Alibaba. Per its latest earnings report, Pinduoduo’s annual active buyers grew to 628.1 million, moving closer to Alibaba’s 726 million.
Both Alibaba and JD.com have launched new platforms catering to users from lower-tiered cities. “It is a capital-intensive exercise that requires the eCommerce companies, such as JD.com, to expand logistics infrastructure in the rural areas,” said Shawn Yang, managing director at investment bank Blue Lotus Capital.
About CBME
CBME is an established one-stop trade fair with nearly 20 years' experience of bringing together the movers and shakers in child, baby and maternity industry. Uniting top buyers, manufacturers, distributors, suppliers and sellers together under one roof in Shanghai, China annually. CBME hosts hundreds of quality industrial events, training events, private match making meetings. Awards and industry reports release all year around. As a gateway to key sourcing hubs for child, baby and maternity products and services, CBME now covers the most potential markets in the world and is regarded as a MUST-ATTEND show in the world where the key persons to share knowledge and create business opportunities.
