China’s main e-commerce Platforms saw gross merchandise value (GMV) grow 13.6 percent year-over-year during the 618 shopping festival, according to third-party data, although profit margins are likely to be squeezed amid a fierce price war .
The estimated GMV growth, published in a report from research firm Analysys on Thursday, includes sales on China’s largest online shopping platforms: Alibaba Group Participationin Taobao and Tmall, JD.com, Pinduoduo, ByteDançaDouyin and rival short video platform Kuaishou.
New competitors in the area of e-commerce appear to have greater momentum than Alibaba and JD.com, the two long-time players in the national market. Alibaba owns the South China Morning Post.
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Douyin, the Chinese version of TikTok, led all other platforms with a 26.2% increase in GMV, followed by Pinduoduo’s 17.7% and Kuaishou’s 16.1%. Alibaba and JD.com saw GMV grow 12% and 5.7%, respectively, according to Analysys.
Workers sort packages at an express logistics company in Huzhou, eastern Zhejiang province, June 18, 2024. Photo: Xinhua alt=Workers sort packages at an express logistics company in Huzhou, eastern Zhejiang province, June 18 2024. Photo: Xinhua >
Companies have largely stopped publishing their own GMV figures for major shopping festivals, including for event 618 this year. However, Analysys’ numbers align with the limited numbers growth narrative that companies have released this year.
JD.com said on Wednesday that transaction and order volume during the mid-year sales extravaganza broke records, without disclosing exact numbers.
Taobao and Tmall’s GMV also set a new record during the campaign period through June 18, according to people familiar with the matter.
“The gap between online growth and total retail sales growth has gradually widened, indicating that the driving force of online consumption is significantly stronger than offline consumption,” Analysys said in the report.
“Although there is no obvious trend of reduced consumption this year, consumers are generally more rational in their spending patterns,” said Joyce Ju, vice president of Greater China Internet Research at BofA Securities.
Ju noted that some categories such as apparel and home appliances have seen weaker online sales, while segments such as online food delivery remain more resilient.
Despite GMV growth, many merchants have complained that profits are dwindling due to a brutal price war that has emerged as platforms compete to attract price-conscious consumers in a slowing economy.
Zuoliang — a national brand that sells bird’s nest soup, a Chinese cuisine, on JD.com — said in a social media post on Thursday that it was “forced to sell at a price even lower than our cost” during the event 618, creating an “unprecedented dilemma”.
Other brands have also publicly complained about losses on their products, including clothing and household appliances.
A live broadcast sells products online from Longquan Township in southwest Guizhou Province on June 18, 2024. Photo: Xinhua alt=A live broadcast sells products online from Longquan Township in southwest Guizhou Province on 18 June 2024. Photo: Xinhua>
Merchants have been trying to adopt a more rational sales approach this 618 season, but platform operators have become more aggressive in providing subsidies and cash discounts to consumers, according to Ju.
“E-commerce platforms are placing greater emphasis on price competitiveness than ever before, with the aim of protecting and regaining market share in a context of intensifying competition in the sector,” said Ju.
Pinduoduo reportedly introduced an “automated price tracking system” for merchants to quickly adjust prices online during the 618 event. Douyin has also been testing a smart pricing system for merchants, according to recent Chinese media reports.
During the event, the delivery rate for e-commerce orders grew 23% year-on-year, outpacing GMV growth, mainly due to higher return rates and a potential annual decline in the value per order, reflecting more conservative behavior of the consumer. according to an HSBC research note on Thursday.
Jessie Li, a 30-year-old woman living in Shanghai, said she spent nearly 4,000 yuan during this year’s sales event. However, this year she opted to buy “obviously cheaper” brands that she wouldn’t have bought a few years ago. Many of these are national brands that offer similar quality at lower prices, she said.
“After my boss reduced my quarterly bonus last year, I had no choice but to become much more price sensitive,” Li said.
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