Chinese online shoppers are tempted by high discounts, payment plans and underspending
HONG KONG (AP) — Chinese shoppers were treated to big discounts, new products and payment plans as online merchants tried to revive their sluggish appetite for money during China’s first major online shopping festival following the end of its zero-COVID policy.
An e-commerce retailer for the first time JD.com has not released the results of its 618 shopping festival, which ended Sunday, making it difficult to know exactly how much has been spent. A larger shopping festival, Single’s Day, held every November 11, brings in billions of dollars.
Analysts said most consumers have become more price conscious and more reluctant to spend given the sluggish economy.
“Chinese consumer confidence remains weak due to a mix of geopolitics, continued weakness from COVID-19 and domestic Chinese politics,” said Shaun Rein, founder and director of the China Market Research Group in Shanghai.
Rein said consumers in general probably spent less in 618 as online retailers were already discounting heavily due to the pandemic, so the deals on offer weren’t much of an improvement.
“Chinese consumers have been price-conscious for months, looking for deals and trades across most product categories,” Rein said.
Retail sales — a key indicator of consumption — missed growth forecasts in May, rising 12.7% from a year earlier and slowing from an 18.4% jump in April, according to the National Bureau of Statistics.
For years, China’s leaders have been trying to turn the economy from one driven by construction and other investment to one fueled by consumer spending, the lifeblood of the US and other advanced economies.
But with the recovery from disruptions caused by the pandemic already faltering, shoppers still need to resume spending as freely as they did in the past.
To entice customers and boost spending, e-commerce platforms have invested billions of yuan in incentives and subsidies for both customers and merchants.
In March, JD.com launched a “10 billion yuan subsidies” program to compete with rival Pinduoduo, which is known for its low-priced goods. The CEO of Alibaba’s e-commerce business unit, Trudy Dai, has also pledged “huge, historic” investments to attract users to its platforms.
Despite weak overall consumption, categories such as cosmetics and luxury goods posted larger sales increases. According to Jacob Cooke, CEO of e-commerce consultancy WPIC, many luxury brands participated in the online festival.
“Luxury coming back online is a big trend because that’s the category that’s been hit really hard by COVID-19,” says Cooke. “Some brands can see up to a tenfold increase in sales compared to last year.”
According to Chinese media reports, those willing to splurge did so, with early results showing strong sales from high-end brands such as Bulgari and Celine. Other luxury brands such as Max Mara, Valentino and Maison Margiela saw their sales increase 20 times compared to the previous year, according to data from JD.com at the start of the festival.
Burberry, Chloe and Miu Miu’s sales in the first 30 minutes of the 618 festival in late May surpassed their total sales during the shopping festival a year earlier, according to Tmall data.
This year, more luxury brands joined in to boost sales in China after their first decline in five years amid China’s strict “zero-COVID” policy and lockdowns weighing on retail spending.
Some brands, such as Moncler and Lemaire, participated in Tmall for the first time.
Many also took the opportunity to launch new products online, with some offering rare discounts and other incentives such as interest-free payment in 12-month installments. On Tmall, Coach discounted some of his handbags by 75%, and Jimmy Choo also sold his signature Romy heels at 50% off.
Big ticket items such as air conditioners and electric vehicles also performed well. Known for their home appliances, Midea and Haier saw sales on JD.com surpass 100 million yuan ($13.97 million) in minutes when the festival first started.
