618 shopping spree stimulates pent-up appetites
Chinese consumers have shown rising demand for higher-quality and new-generation products containing innovative technologies during the June 18 shopping festival, and ensuring smooth logistics and supply chains is of great significance in promoting the recovery of consumption, industry experts said.
They added that the nearly three-week-long e-commerce extravaganza has stimulated consumers' purchasing appetites and helped shore up the economy despite the challenges from the resurgence of domestic COVID-19 cases and changes in the external environment.
E-commerce giant JD, which initiated the midyear promotional event that officially kicked off at 8 pm on May 31 this year, said its transaction volume stood at 379.3 billion yuan ($56.6 billion) as of Saturday, an increase of 10.3 percent year-on-year from 343.8 billion yuan in 2021. The growth rate represents a slowdown compared with 27.7 percent a year ago.
Alibaba Group's online marketplace Tmall and social commerce platform Pinduoduo did not disclose their gross merchandise volume during the shopping spree.
Liu Hui, director of the Consumption and Industry Development Research Institute of JD, said although the pandemic had an impact on consumption, the June 18 online shopping festival has injected a strong impetus into the nation's consumer market and fully unleashed people's pent-up purchasing demand.
Liu said about 79 percent of consumers continuously pay close attention to newly launched products based on their research, with the transaction volume of new products in the categories of food, consumer electronics and home appliances seeing explosive growth.
According to JD, sales of projectors and virtual reality headsets surged more than 62 percent and 50 percent year-on-year, respectively, during the shopping festival, while the transaction volume of semi-cooked dishes skyrocketed 164 percent on a yearly basis.
"We observed that Chinese consumers have become more rational during the midyear promotion gala, and they are inclined to choose higher-quality and new products, rather than commodities with lower prices," Liu said.
Moreover, the tech-savvy Gen Z－people born between the mid-1990s and the early 2010s－are gradually emerging as the mainstream consumers and becoming the major force driving the growth of new products, he added.
Liu said, brand owners and manufacturers are increasingly attaching greater importance to the consumption demand of the post-1995 generation and customizing new products, especially for them.
Moreover, residents from lower-tier markets, especially townships and rural areas, have seen an explosive surge in online shopping, presenting huge potential and spearheading the growth of the country's consumption market, he added.
The midyear promotion gala has stimulated consumers' purchasing desire dampened by COVID-19 flare-ups and has boosted the recovery of the economy, said Wang Yun, a researcher with the Academy of Macroeconomic Research.
China's consumer market is expected to gain growth momentum in the second quarter and gradually recover from the COVID-19 impact, along with better containment of the pandemic and a series of supportive policies to shore up consumption, Wang said.
Experts also warned that the COVID-19 resurgence has caused supply chain disruptions and logistics congestion, thus affecting consumers' online consumption habits, as they tend to choose e-commerce platforms that ensure commodities are delivered on time.
Xin Lijun, CEO of JD Retail, said the outbreak of the pandemic has led the whole society to recognize the value of the supply chain explicitly and profoundly. The company will continue to open its supply chain infrastructure, technologies, expertise and capabilities to push forward the development of the whole industry, he added.
"Only by ensuring the stability and smooth operation of supply chains and logistics in the face of uncertainties brought about by the pandemic can businesses maintain stable operations and will consumption willingness see better recovery," Zhang Yong, CEO of Alibaba Group, said in May.
Dong Yuhui, a lecturer at education training company New Oriental, has become a big hit recently by selling agricultural products in both Chinese and English through livestreaming. Such a method of teaching English and selling goods at the same time has gained popularity among young people.
Followers of Dongfang Zhenxuan or Oriental Selection, New Oriental's livestream channel on shortvideo platform Douyin, topped 10 million viewers on June 16, about 10 times that of a week earlier, with sales revenue reaching 29.63 million yuan from June 11 to 17. Shares of the Hong Kong-listed New Oriental have surged about 700 percent since the start of the month.
Consumers are desperate to shop following the pandemic, and data from internet search giant Baidu show the search for 618 and relevant keywords is 10 percent higher than last year, said Sharry Wu, global accounting firm EY's China consulting business transformation leader.
"Compared to last year, we see more platforms doubling down on their promotional strategies by focusing on food and beverage, home appliances, health and sports categories, which corresponds to consumers' strong demand," Wu said, adding that in general, consumers will likely be more cautious in making big purchase decisions.
"It is extremely important for brands to understand their current and future consumers in order to drive innovation. The key to capturing growth opportunities is to explore new business models that really matter to the brand's target customers and explore the value of innovation," she added.
According to the National Bureau of Statistics, retail sales of consumer goods, a significant indicator of consumption strength, stood at 17.17 trillion yuan, down 1.5 percent year-on-year in the first five months.
In order to promote the recovery of consumption and keep economic fundamentals stable, the country has rolled out a series of detailed measures, including handing out consumption vouchers, reducing purchase taxes on some passenger vehicles, and boosting sales of big-ticket items like automobiles and home appliances.
China's consumer market is expected to see a recovery of growth this year, fueled by income increases of Chinese residents, continuous recovery of supply chains and a raft of supportive policies to spur consumption, said Zhao Ping, deputy head of the Beijing-based Academy of China Council for the Promotion of International Trade.
More efforts are needed to further cut taxes and fees to help micro, small and medium-sized enterprises tide over difficulties, boost employment and increase residents' disposable incomes to further perk up consumption, Zhao added.
The pandemic has fundamentally altered Chinese consumers' philosophies of consumption, making them more restrained and pragmatic, said Eric Hor, managing director of Accenture Strategy &Consulting Greater China.
"In addition to restraining their shopping impulses and reducing unnecessary expenditures, people have begun to conduct in-depth research and thorough comparisons before deciding on what to buy, and regard the selection process as an integral part of the consumer experience," Hor said.
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