Less confident consumers

Was the 618 online shopping festival a riot of consumer confidence after lockdown measures had eased or further evidence that demand has dropped and the Chinese economy is slowing?

Well, it depends who you ask.

According to Xinhua 618 was a “sales bonanza”, while the Global Times celebrated sales figures from the three-week event as “proof of a bounce back in consumer spending, manufacturing and logistics”.

Then there was the other view: ThePaper.cn described the discount-fuelled extravaganza as “the most deserted 618” it had witnessed.

No one is disputing the underlying statistics.

JD.com, the e-commerce firm which established the 618 event in June 18, 2004 to mark its founding date, posted sales of Rmb379.3 billion ($56.6 billion), a 10.3% increase on last year’s total.

Technically this was a new record, as the Global Times pointed out, but the 10% increase was also a new low for China’s second biggest e-commerce event (after Alibaba’s Singles’ Day in November). In previous years the increases have tended to be around 30%.

So what’s behind the drop-off?

One factor is Covid and the uncertainty that many Chinese feel about what the coming year will bring: will they travel, will they be locked down, and are their jobs safe in a slower economy?

Ms Zhou from Beijing told WiC she often buys branded cosmetics during the online shopping galas but that she didn’t feel the need this year because she had stopped going out to restaurants and now largely works from home.

Ms Liu, by contrast, said she took advantage of some of the discounts but that her interest had shifted from clothes and sports items to equipment for the house. “My focus is making sure we have what we need if we have to lock down again,” she said.

Noise-cancelling headphones for the family and shampoo were some of the items on her list.

“I find it hard to get excited about these shopping galas,” Ms Liu told WiC. “The pandemic has made me realise I want to live a simpler life.”

Retail sales fell 11.1% in April as the leading consumption centres of Beijing and Shanghai were crippled by Omicron flare-ups.

The lockdown restrictions also stopped many online deliveries from reaching recipients, despite the fact that many delivery workers continued to work (even though in some cases they had to sleep rough because their residential compounds wouldn’t allow them to re-enter if they left).

For the first three months of this year, both JD.com and Alibaba posted their slowest revenue growth since going public. Slower sales in the period preceding 618 also impact how retailers do during the gala as they have fewer customer reviews and reduced funds to subsidise the hefty discounts that attract shoppers’ attention.

Growth areas from this year’s 618 included: personal hygiene and household cleaning products (up 33.7%); frozen food and ready meals (up 27.5%); and wine and spirits (up 16.2%), according to digital retail analysts Syntun.

Over 40 online platforms took part in 618 ranging from major e-commerce sites such as JD, Tmall and Pinduoduo to livestreaming platforms such as Douyin and Kuaishou.

Syntun estimates that JD, Tmall and Pinduoduo took a total of Rmb582.6 billion in sales and that livestreamers took Rmb144.5 billion.

JD instant retail channel JDtoHome also proved popular perhaps because customers worried about their orders getting caught in logistics bottlenecks.

JDtohome allows shoppers to buy products from local brick-and-mortar shops that deliver more rapidly to nearby homes.

Community group-buying platforms such as Duoduo Mai Cai also got in on the 618 action this year generating Rmb15.3 billion of sales according to Syntun.

Community purchasing grew in popular during lockdown in Shanghai when other food channels failed to deliver adequate supplies.

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