Mid-year online shopping bonanza shows potential of domestic consumption

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A staff presents products via live-streaming in an e-commerce base in Qingdao, Shandong Province in east China, on June 18 (XINHUA)

China's largest mid-year online shopping festival 618, deriving its name from its culmination on June 18, has helped businesses make a strong comeback after they suffered from waning consumption earlier this year due to the novel coronavirus epidemic.

Bestore Food, a snack food retailer headquartered in Wuhan, Hubei Province in central China where the epidemic caused the most disruptions, had seen its offline businesses wilt. But it regained growth momentum by driving online sales. Then the mid-year shopping festival, lasting from June 1 to 18 with pre-sale promotions in May, saw it make up its losses further.

The company said its sales during the shopping spree exceeded 500 million yuan ($70.7 million). Its online store on e-commerce giant JD.com's platform increased 54.7 percent year on year. Total sales were on par with the volume during Double 11 last year, the other major shopping carnival held on November 11.

Live-streaming and short video platforms became the key channels for expanding online sales during the mid-year shopping event, Zhao Gang, Vice President of Bestore, told Digital Marketing magazine.

"Though I had not planned to buy anything at first, the snacks Bestore showed in their live-streaming looked so delicious that I couldn't help but splurge on them, especially as I had some coupons," a netizen called Jelly posted on Weibo, the popular Chinese social media platform.

Shopping frenzy

The 618 festival was started by JD.com in 2010 and has become as popular as Double 11 initiated by another e-commerce giant, Alibaba. For e-commerce retailers, 618, the first large-scale shopping festival since the novel coronavirus outbreak this year, was a major opportunity to boost sales. With people still staying indoors and making online purchases to prevent another outbreak, sales on e-commerce marketplaces saw robust growth during the promotion. The Chinese consumption market once again showed its potential.

China's e-commerce giants set new sales records. With pre-sale volumes surging 515 percent year on year within the first hour, Alibaba's online marketplace for branded goods, Tmall, saw deals totaling 698.2 billion yuan ($98.6 billion). JD.com recorded 269.2 billion yuan ($38 billion) in orders during the promotion, up from 201.5 billion yuan ($28.5 billion) last year.

Xu Hongcai, Deputy Director of the Economic Policy Commission, China Association of Policy Science, told Beijing Review the demands of indoor consumption as well as consumption coupons distributed by local governments and discounts offered by the e-commerce platforms increased people's enthusiasm during the festival. Data from Chinese online payment clearing house NetsUnion Clearing Corporation showed 26.18 billion transactions worth 16.91 trillion yuan ($2.38 trillion) were made from June 1 to 18, up 52 percent and 42 percent respectively from last year. The number of transactions on June 1 hit nearly 1.6 billion, a single-day record.

More than 100,000 brands signed up for the event on Tmall, double the number last year. National stores launched and operated by the governments of nine countries, including Russia, Singapore and Thailand, also participated in the event for the first time, Alibaba told Global Times.

To attract more customers, many e-commerce players, including Alibaba, JD.com, Suning.com and Pinduoduo, offered discounts and coupons. JD.com offered 50-percent discounts on more than 200 million commodities, including electronic products, home appliances, daily necessities, cosmetics and even housing.

Since many local governments have issued consumption coupons to encourage both online and offline consumption, the e-commerce platforms are exploring new partnerships. Tmall collaborated with local governments and brands to float discounts and coupons worth over 10 billion yuan ($1.4 billion).

The shopping frenzy was reflected in the buzzing delivery sector. According to the State Post Bureau, postal and courier companies handled nearly 4.7 billion packages, up more than 48 percent over the same period last year. Around 260 million packages were handled daily on average from June 1 to 18.

The freight volume of express delivery rose 27.1 percent during the June 1-18 period compared to the same period in May, which suggested consumer confidence and economic recovery, Manbang, a China-based freight service provider, said in a report released on June 19.

"The 618 promotion helped ease the impact of the epidemic on businesses, drove domestic demand and accelerated economic recovery," Xu said.

With the resumption of production and logistics, China's retail consumer goods sales, especially online sales, have gradually recovered. According to the National Bureau of Statistics, online retail sales increased by 4.5 percent year on year in the first five months, quickening by 2.8 percentage points from the first four months.

New channels

Online sellers are also exploring the booming lower-tier markets. According to Pinduoduo, consumers from third- and fourth-tiered cities have strong upgraded consumption demands.

For rural sellers, the e-commerce platforms are providing new channels for their local agricultural products, which can now be sold more widely. This has also become a key driving force of poverty alleviation. Data from Tmall showed that over 1.2 million sellers from poverty-stricken counties had joined the marketplace by June 18, up 36 percent year on year.

To benefit both rural sellers and consumers, it is necessary to promote agricultural product brands, improve the quality control mechanism and upgrade supply chains, Xu said.

Live-streaming, the new trending sales promotion mode, continues to be widely embraced by e-commerce platforms to engage buyers more. Many sellers as well as local officials and celebrities have joined live-streaming promotions.

On June 1, transactions made during live-streaming on Taobao, Alibaba's another popular online marketplace, amounted to 5.1 billion yuan ($720 million). During 618, 13 live-streaming programs on Taobao saw a turnover of over 100 million yuan ($14.1 million).

For e-commerce sellers, 618 is now also an opportunity to launch trials of new digital technologies, Chui Xue, Vice President of Alibaba, told Global Times. Besides live-streaming, Tmall adopted augmented reality (AR) technology for customers to try out shoes and cosmetics online.

According to Xu, the burgeoning online sales modes will drive traditional enterprises to seek digital transformation and make full use of the advantages of the digital economy.

Though 618 concluded with remarkable results, according to Pan Helin, acting Dean of the Digital Economy Institute at Zhongnan University of Economics and Law in Wuhan, services will still have to be enhanced and supplies improved to sustain consumption growth.

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