SHANGHAI — As a key barometer of China‘s overall retail temperature, this year’s 618, a monthlong shopping festival that ended around June 18, was visibly subdued — major players like Alibaba and JD.com moved away from slogans such as “the biggest 618 ever,” while livestreaming star Austin Li couldn’t help but proclaim, “Sales have not been easy.”
To be sure, online retail is recovering at a steady pace. According to the latest official data, online retail sales jumped 12.4 percent year-over-year to almost 5.77 trillion renminbi, or $795.1 billion, from January to May.
However, third-party data pointed to an underwhelming 618. Based on data from Syntun, a Chinese third-party data agency, total sales on Tmall, JD.com and Pinduoduo reached 571.7 billion renminbi, registering a year-over-year decline of 6.9 percent. Tmall ranked first among the three, followed by JD.com and Pinduoduo.
According to Syntun, home appliances, skin care, cosmetics and perfume, and personal care products were the top three categories in terms of sales during 618 on major e-commerce platforms, with sales reaching 75.6 billion renminbi, or $10.4 billion, 26.1 billion renminbi, or $3.5 billion, 9.1 billion renminbi, or $1.2 billion, respectively.
“The data we’re seeing shows solid consumption sentiment with a wide range of subcategories, which means that consumers are still willing to spend, there’s just less of a ‘craze’ than we’ve seen in previous years,” said Cooke.
Over a third of sales came from livestreaming, reaching 206.8 billion renminbi, according to Syntun.
Douyin has become the largest livestreaming retail platform out of the big three, according to Syntun.
Livestreaming, a retail format that became ubiquitous during the COVID-19 years, has completely reshaped consumer behavior. For most luxury brands, livestreaming doubles as an online showroom that feels intimate and interactive. On Douyin, Net-a-porter, which recently revealed its plans to exit the Chinese market, is using livestreaming to offload inventory at steep discounts.
At Burberry, the brand used livestreaming to offer discreet discounts, with the broadcaster announcing “buy 10,000 [renminbi], get 500 off” during a livestream.
For megabrand Louis Vuitton, livestreaming offered an extra opportunity to provide individualized retail service, in the form of virtual VIP rooms on WeChat. Customers could sign up for a 30-minute session that provided a one-on-one shopping experience, which quickly caught the attention of Chinese netizens and became a Weibo hot topic at one point.
A screenshot of Burberry’s livestreaming session on Tmall; Screenshoots of Self-portrait and Net-a-porter’s Douyin livestreaming sessions.
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For many luxury brands, this year’s 618 felt like a big clearance sale, which was far from ideal.
“The new strategy of Chinese e-commerce platforms is focused on discounts and value, which is obviously at odds with the goals of luxury brands who joined these platforms to gain exposure to new consumers and present their brand universe to Chinese consumers well beyond their retail stores’ footprint,” said Jacques Roizen, managing director of research and consulting at Digital Luxury Group, a Shanghai-based marketing agency.
However, Roizen thinks brands can still do well on Tmall or JD.com, but to do so, they must “exercise greater rigor to maintain a qualitative brand presence on these platforms,” said Roizen.
“The key challenge is resisting short-term revenue gains from promotional activities, which can damage brand equity,” added Roizen.
Another change to this year’s 618 was the elimination of a pre-sale period, which usually lasts more than a week. For Jacob Cooke, chief executive officer and founder at WPIC, a Beijing-based e-commerce consulting agency, the strategy shift was meant to encourage more spontaneous purchases.
“Previously, platforms and brands held complex promotion mechanisms, where prices might fluctuate across the sale window, which consumers willingly tracked to secure the best prices. Brands would use these months to shed inventory at a discount, but also roll out new product launches amid these consumption spikes,” explained Cooke.
“But nowadays, consumers don’t want to place preorders and then wait over a week for the transaction and shipment to process, hence the smart cancellation of the presale,” he added.
Another reason for more direct discounts on Tmall and JD.com was to play defense with aggressive players such as Douyin and Pinduoduo.
According to data from Azoya, Douyin e-commerce sales jumped 50 percent year-over-year in the first quarter of 2024, Kuaishou e-commerce saw a 28 percent growth in the same quarter, Pinduoduo’s increased almost 30 percent in the first quarter, while Taobao’s total transaction growth rate in the first quarter hovered around 10 percent.
This year, Douyin and Pinduoduo soft-launched similar automatic price adjustment systems that would ensure the lowest price possible.
Shifting algorithms also means a more challenging e-commerce reality for smaller players.
“Traffic will be concentrated on products and top merchants with a higher probability of transaction,” said Dave Huang, Azoya’s director of business development.
However, smaller merchants are still game — participating in 618 meant they were exposed to more consumer data.
“One beauty brand founder noted that Tmall has made significant changes to its business intelligence tools, which are now free during the promotion, offering better data collection,” said Huang.