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Chinese consumers bought billions worth of items in China’s first major online shopping festival after emerging from the pandemic as merchants slashed prices, but analysts say consumer confidence remains weak.
Chinese merchants offered customers deep discounts during the 618 shopping festival, which ran on China’s major shopping platforms from late May to June 18, hoping to boost sales amid a consumption recovery weaker than expected.
Major shopping festivals, as an e-commerce retailer from JD.com 618 and Alibaba single daysThey are often barometers of consumption in China, and Chinese e-commerce platforms are often involved by offering discounts and incentives to consumers.
Analysts say consumption remains low this year as China emerges from the pandemic, even as platforms like JD.com, Tmall, Taobao and Pinduoduo have offered billions in subsidies.
“Chinese consumer confidence remains weak due to a combination of geopolitics, continued weakness from Covid-19 and domestic Chinese politics,” said Shaun Rein, founder and managing director of the China Market Research Group in Shanghai.
Rein said consumers were less likely to spend more during 618, as merchants had already been discounting heavily for years due to the pandemic, and deals weren’t much better compared to previous months.
In March, JD.com launched a “10 billion yuan subsidy” program to compete with rival Pinduoduo, known for its low-priced products. The chief executive of Alibaba’s e-commerce business unit, Trudy Dai, has also previously pledged to make “huge and historic” investments to attract users to her platforms.
“For months, Chinese consumers have been price-conscious, bargain-hunting and buying down on most product categories,” Rein said.
This year, for the first time, JD.com did not reveal its total sales numbers for the 618 event, despite saying in a blog post that the 2023 shopping extravaganza had “exceeded expectations, setting a new record.” .
Not last year either alibaba nor JD.com released final numbers for Singles’ Day in November, amid muted festivities during Covid-19 and an expected slowdown in growth.
JD.com said in a blog post that during the 618 shopping festival, consumers bought 10 times more products that were eligible under its “10 billion yuan subsidy” program, compared to March.
Despite overall subdued consumption, categories like cosmetics and luxury goods saw a bigger increase in sales compared to the previous quarter, according to Jacob Cooke, chief executive of e-commerce consultancy WPIC.
For this year’s 618 event, more luxury brands turned out looking to boost sales in China after the sector in 2022 declined for the first time in five years amid China’s strict “zero-Covid” policies and lockdowns that affected retail spending.
Brands like Moncler and Lemaire participated for the first time in 618 on Tmall.
Many luxury brands also took the opportunity to launch new products online, with some offering exceptional discounts and other incentives, such as interest-free installments for 12 months.
Sales of brands including Burberry, Chloe and Miu Miu in the first 30 minutes of the 618 festival in late May surpassed their total sales during the shopping festival a year ago, according to Tmall data.
“Luxury coming back online is a big trend, because that’s the category that’s been hit hard by covid-19,” Cooke said. “Some brands may see up to a 10-fold increase in sales over last year.”