The landscape of shopping festivals such as 618 and 11/11 (Singles’ Day) in China has evolved from single-day events into month-long celebrations, marked by extravagant galas and a crescendo of discounts and promotions. The festivals have continued to grow year on year, and this year’s 618 (which started on 20 May and ended on 20 June) has been no exception. Within the first four hours of the event kick-off, 59 brands on Taobao and Tmall reached a target of RMB 100 million (£10.83 million) gross merchandise value (GMV), while 376 individual products reached a GMV of over RMB 10 million (£1.08 million). Xiaohongshu announced that its sales had tripled year on year.

But sales figures are not the only important takeaway. Here, we summarise some of the key trends from this year’s 618 shopping festival.

Popular categories: Electronics and home appliances

Apple offered some of its biggest discounts ever during this year’s 618, and consumers wasted no time in taking advantage of them, dropping over RMB 1.5 billion (£162.4 million) on iPhones in the first hour of sales on 20 May. On Tuesday, 18 June (the ‘official’ day of the festival), the iPhone 15 became a trending topic on Chinese social media. Chinese smartphone brands Huawei and Xiaomi also reported over RMB 100 million (£10.83 million) in GMV.

Home appliances, cosmetics and healthcare products also saw strong sales, reflecting the fact that Chinese consumers might be spending more rationally than during past shopping festivals, but are willing to shell out on products that they feel benefit themselves or their home.

No more pre-sales

Tmall and Taobao dropped the ‘pre-sales’ format – where customers put down a deposit on products they wanted to buy – for this year’s 618, with the goal of simplifying the purchasing experience for consumers. The platforms leaned into a series of ‘flash sales’ instead, aimed at using limited-time discounts to tempt budget-conscious consumers to make impulse purchases.

Pinduoduo continues to push Tmall and JD

Budget shopping platform Pinduoduo (PDD) has emerged as a strong challenger to the more mainstream platforms during recent shopping festivals thanks to its low prices. This year, it has taken things a step further with an automated tool that tracks prices on other platforms and adjusts its own prices if it finds a cheaper offering. This shows that while the narrative has often been about value over pricing in recent years, customers are still attracted to bargains.

AI tools go mainstream

During 618, Taobao customers could use large language model (LLM) based AI chatbot Wenwen to summarise the pros and cons of similar products, generate purchase recommendations, and compare deals to get the best prices. Taobao and Tmall merchants also benefitted from AI tools, including visual generative tools for product images (allowing manipulation of models or background images, for example) and text generation for marketing copy. Consumers have responded well to these innovations, with Alibaba reporting that the click-through rate of AI-enhanced images was 25% higher than original photos.

Brand-owned live streams are growing

Live streams managed and hosted by brands seem to be growing in popularity, which will be a boon for companies tired of paying high influencer fees. Figures released by Xiaohongshu showed that the number of brand-owned live streams on the platform on the first day of 618 this year was 3.8 times higher than the same period last year, and the GMV was also 4.2 times higher.

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The landscape of shopping festivals in China has undergone a remarkable transformation over the years. What started as single-day events blossomed into month-long celebrations, marked by pre-heats, extravagant galas and a crescendo of discounts and promotions.

However, in recent years, a quieter revolution has been underway, with the shopping holidays now shifting towards more lowkey events that focus on conscientious consumption. Especially in the past year, consumers have become more rational in their purchases, leading to an increase in focus on cost efficiency and high value at low prices.

Despite the continued year-on-year growth of these festivals, there are signs of a slowdown, with e-commerce giants like Alibaba and JD.com scaling back on reporting gross merchandise value (GMV) for major events like 618 (‘Mid-Year Festival’ on 18 June) and Double 11 since 2022. This deceleration underscores the need for brands to adapt their strategies to navigate an increasingly competitive and saturated market.

What does this mean for shopping festivals in China?

While shopping festivals remain a cornerstone of the Chinese e-commerce landscape, brands must adopt a more strategic approach to their participation. Content and entertainment have emerged as essential tools of product promotion, with short videos and live streaming gaining prominence. During last year’s Double 11 festival, live streaming alone contributed an estimated GMV of RMB 215.1 billion (over £233 million), which was a year-on-year growth rate of 20%, while views of short videos on Taobao surged by 113% during last year’s 618 festival.

Although in the past, participation in 618 and Double 11 was a given for all brands, nowadays, careful consideration is required due to heightened competition and diminishing profit margins. Collaborating with key opinion leaders (KOLs) and live streamers during these peak periods often requires premium fees, while consumers expect steep discounts, squeezing margins.

An alternative approach that is gaining traction among brands is to host their own live broadcasts, offering greater control over messaging and content. By circumventing established live streamers, brands can tailor their broadcasts to align with their unique brand identity. However, starting off with brand live streams during the major shopping festivals may not be the best strategy for smaller brands. The lack of brand recognition will lead to the risk of being overshadowed by larger competitors, ending in low viewership and a lack of sales.

Instead, newer brands to market may consider starting off their shopping holiday journey by participating in shopping holidays such as Double 9 or Double 12, where they can make a splash without the intense scrutiny of 618 or Double 11. Alternatively, brands may also choose to participate in other holidays such as Qixi (Chinese Valentine’s Day) and International Women’s Day. These holidays allow for more theme-focused campaigns and increased opportunities for emotional storytelling that may resonate with Chinese consumers.

Even when not participating, shopping holidays can be used by brands as a barometer of consumer sentiment, allowing brand managers to understand emerging product trends and consumer behaviour patterns. Data provided through these holidays can be used to shape brand strategies for the remainder of the year.

The 618 shopping festival in 2024

With promotions having begun on 20 May and lasting until 20 June, the 618 shopping festival this year has got off to an impressive start. In preparation for the event, Alibaba made several major changes. The company provided its Taobao platform with its largest update in several years, simplifying the sales experience for customers and allowing merchants to design their stores more easily.

Moreover, Taobao and Tmall removed the pre-sales model, which had previously allowed users to place deposits prior to the start of campaigns to guarantee product availability in the case of the product selling out. The cancellation of this model comes as an attempt to increase competitiveness against other platforms and prevent consumers from switching to other platforms during the pre-sales period.

These changes were made with the intention of improving the user experience, thus encouraging prolonged browsing of the platform.

Within the first four hours of the 618 event kick-off on 20 May 2024, the RMB 100 million (£10.89 million) GMV target was already reached by over 59 brands on Taobao and Tmall, while 376 individual products reached over RMB 10 million (£1.09 million) in GMV each.

Even as we wait for the no doubt impressive total sales figures from this year’s 618 festival to come in, over the last two years, it has become apparent that consumers are less inclined to do a large percentage of their shopping during major shopping festivals. Instead, they look for discounts year-round. This has led to less focus on the likes of 618 and Double 11 and could be perceived as a slowdown. However, at RedFern Digital, we see this more as a normalisation. As the retail market steadies and consumers are less driven by the hype around major events, brands should focus on increasing recognition and awareness, steadily growing a loyal base of customers year-round. Content driven engagement, loyalty programmes, and unique campaigns or brand collaborations throughout the year can help with increasing brand value, while shopping holidays can be treated as add-ons.

This article was originally published in the June 2024 edition of RedFern Digital’s The Red Edition. Click here to download the full magazine.

The post The Evolution of Shopping Festivals in China appeared first on Focus - China Britain Business Council.

China’s major e-commerce platforms sold approximately RMB 695.9 billion (£84.7 billion) of goods during China’s annual 618 shopping festival (measured in gross merchandise volume from 31 May to 18 June) according to data monitoring firm Syntun. Tmall was the top-performing traditional e-commerce platform, but live streaming e-commerce platforms like Douyin and Kuaishou exhibited strong growth, generating a GMV of RMB 144.5 billion (£17.5 billion) up from RMB 64.5 billion in 2021. 

Despite these huge numbers, JD.com sales only rose 10.3% compared to last year, a sharp decrease from the 2021 event’s 27.7% increase on 2020. As a result, some have suggested that consumers in China could be reining in their spending following strict Covid-19 lockdowns in cities like Shanghai. As Sixth Tone noted, the lockdowns muted sales in the period leading up to 618, hurting the platform rankings that get merchants onto consumers’ homepages on apps like Tmall and JD. 

Platforms had recognised this potential turn down in spending prior to 618, and many shifted from a sales-driven to a service-driven strategy that aimed to retain customers through value-added services rather than capture new ones. For example, JD promoted the reliability of its in-house logistics solutions in response to supply chain disruption caused by lockdowns. It also launched a “green impact initiative” to label products that conform to a set of environmentally friendly standards, with the hope of appealing to shoppers put off by the rampant over-consumption associated with shopping festivals in China. This is a useful insight for brands looking for ways to stand out from the noise during shopping festivals. 

Many categories still saw strong sales growth during 618. Household appliances/electronics were the most popular sales category, followed by skincare, then sports and outdoors. However, skincare sales were down 18.9% year on year according to Syntun, as some consumers simplified their skincare routines as a result of not seeing other people face to face during strict lockdowns. Frozen food and ready meals, on the other hand, saw a year-on-year increase of 27.5%, driven by sales via new “immediate consumption” delivery services such as JD.com’s JD to Home (京东到家).

Data from Alibaba also showed niche hobbies driving consumption trends, consistent with the wider shift towards interest or need-based shopping among increasingly wallet-conscious Chinese shoppers. For example, Tmall saw sales of skateboarding gear jump nearly 300% in the 618 festival warm-up period (31 May-June 3). Camping-related products also saw strong growth.   

618 is now the second-biggest shopping festival in China, dating back to 2004 when it was a simple one-day festival to celebrate the anniversary of JD.com. Today, the festival is no longer confined to a single day or platform, with promotions starting as early as 1 June and extending beyond 18 June (this year’s event on JD lasted from 23 May to 20 June).

While sales may have taken a hit this year, the scale of the 618 festival remains huge, once again highlighting the need for brands to stay on top of the shopping festival calendar in China. In addition to 618 and Singles’ Day, other key shopping festivals include Lunar New Year in January/February, Women’s Day on 8 March, and the 12.12 festival on 12 December.

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