In 2009, Alibaba’s now-CEO Daniel Zhang created the one-day shopping bonanza Singles’ Day. Only 27 merchants participated in the event on that initial November 11, but the e-commerce platform Tmall set a single-day sales record of Rmb52 million ($5.74 million). While the amount seems small by today’s standards, on average each merchant made around Rmb2 million, which was far larger than what they’d sell in a usual day. Liu Qiangdong, the founder of JD.com, looked on nervously. He was worried that if his company didn’t react fast enough, his e-commerce rival Alibaba would steal away his shoppers.
For his own bargain bonanza Liu chose June 18, the day the company was founded and which also happens to be his birthday. Since then 618 Day has been the second biggest online shopping event in China after Singles’ Day – and now features other e-commerce players as well as JD.com (such as Pinduoduo).
Given that it falls in the middle of the year, it has also become something of a barometer of consumer confidence and a dry-run for merchants as they prepare inventory for the much larger Singles’ Day.
Last year 618 became a battlefield for e-commerce livestreaming, with hundreds of out-of-work celebrities descending onto different platforms to plug products (see WiC499).
What happened at this year’s 618? The consensus is that it was, well, uneventful. “There was a lack of trying at this year’s 618. First of all, advertisements to promote the event all but disappeared on TV, newspapers and magazines; but also in elevators, corridors of subway stations, bus stops, social media and all online platforms. If you look up the hot search list on Sina Weibo, 618 and other topics related to the shopping festival didn’t even make it to the top 10,” financial news portal Gelonghui observed.
This year, JD.com claimed that total gross merchandise value (GMV) reached Rmb343.8 billion, up 27.7% from a year ago.
Alibaba did not disclose its total sales figures on Tmall, merely claiming that the first hour of GMV went up 100% from a year ago. Some say the reason the e-commerce giant has been quieter this time is because it was still reeling from April’s antitrust investigation, which saw Alibaba having to pay a $2.8 billion fine.
The rises in sales are a healthy surprise, given the fact that discounts for products were also considerably less aggressive than in previous years. For instance, last year Tmall offered Rmb10 billion of subsidies, while this year the amount dropped to Rmb6 billion.
This year’s 618 saw many e-commerce platforms talk less about GMV and more about improvements in customer service and logistics. Alibaba reported that 95% of its orders were delivered the next day. JD.com claimed that that one of its shoppers in Jiangsu received her goods in just four minutes.
At the end of the day, quality customer service is what builds loyalty, reckoned Tencent News. “It is not to say that e-commerce promotional events are not worthwhile. But we should listen to the voices of consumers, let discounts really be discounts [some merchants inflate their prices ahead of big shopping events] and make the calculation of promotions simpler. These are the ‘real demands’ of today’s consumers. To build trust, e-commerce promotions should pay more attention to the consumer experience, rather than just work hard on gimmicks,” it opined.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.