E-Commerce: Chinese Consumers are Back

23/06/2020

Alibaba and JD racked up records during ‘6.18’ summer gala. That growth was propelled by broad, enormous discounting. Livestreaming is also playing a bigger role 

 

Chinese shoppers are pushing online retail to new heights. Alibaba and JD.com handled record sales of $136 billion during 618 Shopping Festival,  the country’s midyear biggest online shopping gala and one of the most significant barometers yet of how much Chinese consumers are spending as the world’s second largest economy slowly recovers from the coronavirus pandemic. Chinese shoppers who were knuckled down in survival mode during the worst of the country’s COVID-19 outbreak are splashing out again. 

JD.com said that sales for this year’s “618” event topped $38 billion, up more than 33% over last year, while Alibaba said it handled 698.2 billion yuan (nearly $98 billion) during its own campaign, without a year-earlier comparison.  Similar to Singles’s day shopping gala, the 618 festival, which runs from June 1 to June 18, has over the years entrenched itself on the Chinese consumers’ calendar from being a one e-retailer’s anniversary sale event to become a nationwide buying spree, with competitors including Alibaba’s Taobao and Tmall, group-buying platform Pinduduo, and electronics-focused retailer Suning.com all flexing their muscle.

 

©Alibaba. Livestreaming is also playing a bigger role during this year 618 shopping festival.

 

Alibaba and JDcom racked up records during 618 gala, but that growth was propelled by broad, enormous discounting. Chinese economists have for years underlined how consumption are the most important driver for economic growth, as the country continues to try to shift away from an export- and infrastructure-driven economy. According to data, consumer spending made up about 58% of the country’s GDP growth in 2019, compared with 52% in 2011.

Thus, one of the key way due to quickly recover the economy, is booting consumptions thanks to digital couponsThe Chinese government has also latched on to “618” in an effort to spur domestic consumption. Beijing offered government-sponsored coupons to JD users, who could use them to get discounts on items like home appliances or furniture. City mayors used live-streaming to sell local fruits and vegetables.

“Chinese and foreign brands had sluggish sales due to the pandemic, and 6.18 has become their most important opportunity in the first half,” JD Retail Chief Executive Officer Xu Lei said in an interview with Bloomberg Television. For discretionary items like home appliances, “we’ve seen a recovery in consumption.”

 

©JD.com Corporate Blog. Total sales transaction volume during JD.com’s June 18 Anniversary Sale (“6.18”) reached new heights this year of $38 billion.

 

Chinese retail suffered a record collapse in the first three months of 2020, but in the post-pandemic era, suggesting China’s nascent consumer spending recovery has legs.  “The strong GMV at 6.18 will help to dispel market anxiety about virus-related disruptions,” Bloomberg Intelligence analyst Vey-Sern Ling said. “Chinese e-commerce platforms will probably deliver strong 2Q sales and profit recovery due to pent-up consumer demand and an accelerated shift to digital consumption channels driven by the virus.”

Livestreaming is also playing a bigger role during this year’s 618, at a time Covid-19 is fueling an unprecedented boom in online media. Alibaba’s Taobao Live championed the use of influencers to sell everything from lipstick to rockets, prompting rivals like JD and Pinduoduo.

The number of online live-streaming service users in China reached 560 million as of March 2020, accounting for 62% of the country’s total number of 904 million internet users, an increase of 163 million from the end of 2018, according to a report on China’s internet development. In more detail, e-commerce livestreaming sessions topped 4 million in the first quarter, according to China’s Commerce Ministry.

 

©Unsplash. PRC’s economy is inching out of virus slump, but slower than expected. Consumers remain wary, sales continued to contract in May.

 

As people around the world are blocked from leaving their homes, consumers are moving online to do their shopping and livestreaming has grown to become a driving force in China’s e-commerce sector. From a personal trainer who livestreamed her\his daily workout to the Shanghai Fashion Week and the Strawberry Music Festival, among other events, livestreaming has become one of the major trends of 2020. And companies are seeking business too. Livestreaming e-commerce has also grown as many physical retail shops have remained closed for months. According to data, more than 4 million online sales promotion shows were livestreamed in the first quarter. 

Livestreaming is nor the direct consequence of this life digitalization nor only the ultimate entertainment format but it is also the internet’s next form of digital communication. Why livestreaming is so welcomed in China? First livestreaming is the “go-to” option for Chinese consumers when seeking out new products and deciding on what to buy. It is an essential part of the discovery journey, unlike for consumers in Western countries.

Second, livestreaming allows experts to demonstrate the products when being used and talk through their functions in the liveliest way possible. Kols are a part of the live-streaming success. “If there’s a livestream without a (key opinion leader), then it can’t really last,” said Xu Lei, a spokesperson for Xiaohongshu, but the love for convenience of Chinese consumers was one of the major reasons if this success, moreover, there is a feeling of authenticity that comes from live streaming.

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