China’s second largest annual purchasing competition, 618, has historically been a key battleground for the nation’s e-commerce firms. However this yr, the stakes are larger. E-commerce platforms not solely must deal with one another, however with an bold group of short-video and grocery supply apps seeking to seize a bit of the pie.
Since on-line retailer JD.com launched the purchasing competition in 2010 to mark its anniversary on June 18, the occasion has grown right into a mid-year purchasing extravaganza. The competition is second solely to Singles’ Day, created by Alibaba in 2009 and held yearly on Nov. 11.
This yr, e-commerce gross sales throughout platforms grew by 1 / 4 yr on yr to succeed in RMB 578.5 billion ($89.6 billion) through the competition, knowledge from China-based knowledge providers firm Syntun reveals.
E-commerce platforms nonetheless maintain the home-court benefit, however are defending a number of fronts. New rivals like quick video platforms Douyin and Kuaishou supply engaging interactive and social content material at a time when e-commerce firms are grappling with the more and more numerous calls for of customers.
The last decade-old 618 purchasing extravaganza is now not a three-horse race. Gone are the times when Alibaba, JD.com, and Pinduoduo have been the one gamers going face to face. Now, almost all main Chinese language apps wish to capitalize on the occasion.
Whereas it’s not the primary time that quick video apps Douyin and Kuaishou have taken half in 618, the 2 firms seem like getting severe concerning the occasion. Neither have launched their gross sales figures for the purchasing competition, however each firms are making important inroads.
- Douyin went all-in on 618 promotions this yr by internet hosting a slew of promotions. The corporate began its pre-sales marketing campaign as early as Might 25. The corporate additionally rolled out a sport referred to as “The Interplay Metropolis” to have interaction customers, and offered commissions to entice retailers.
- Douyin didn’t reveal gross sales figures, however stated retailers on the platform almost tripled their income in contrast with final yr.
- As a substitute of 618, Kuaishou celebrated its personal purchasing competition, dubbed 616, on June sixteenth. Held simply two days sooner than 618, the competition is ready to capitalize on the purchasing season however is exclusive sufficient for Kuaishou to model the competition as its personal. Like 618, 616 is a month-long occasion that spans from Might 18 to June 16. The corporate didn’t launch total figures, however stated its gross sales in Might greater than doubled in contrast with a yr earlier.
Whereas quick video apps have giant person bases with prolonged person retention, they’ve comparatively underdeveloped e-commerce ecosystems.
To make up for this, the apps have taken completely different approaches to develop their e-commerce companies, both by integrating on-line purchasing into their platforms to transform consciousness into purchases, or by leveraging established benefits in content material to develop market share and deepen cooperation with manufacturers, Chris Mulliken, consulting accomplice at EY, informed TechNode.
“Others proceed to develop gross sales conversions however by means of exterior hyperlinks to different platforms,” stated Mulliken. Quick video apps have additionally partnered with e-commerce platforms—so long as the retailers solely play the position of provider or logistics service supplier.
Within the lead as much as 618 final yr, Kuaishou reached a cope with JD, permitting Kuaishou customers to buy the e-commerce big’s self-run merchandise with out leaving the quick video app. This allowed Kauishou to lock customers into its app, whereas leveraging JD’s inventory and supply capabilities. Douyin struck an analogous cope with Suning in 2020.
Quick video apps aren’t the one one with their sights set on 618, grocery and contemporary produce supply platforms are additionally upping the ante. General gross sales by means of on-demand grocery supply apps, comparable to JD Daojia and Meituan Shangou, reached RMB 17.8 billion throughout this yr’s 618, Syntun knowledge reveals. The Syntun report reveals JD Daojia topped the class, adopted by Alibaba’s contemporary produce supply service Taoxianda and Meituan’s Shangou.
- JD-backed on-demand retail platform JD Daojia doubled gross sales from June 1 to June 18 in contrast with the identical interval final yr. On June 18, the height of the competition, the corporate set a brand new gross sales file of greater than RMB 300 million, essentially the most it had ever made in a 24-hour interval.
- In the meantime, Meituan’s grocery supply enterprise Meituan Shangou rolled out 618 promotions for the primary time, focusing on the grocery class.
“Within the post-pandemic period, O2O platforms are seizing extra alternatives introduced by change in shopper conduct and financial restoration”, EY’s Mulliken stated.
“We see a future whereby all of those future traits converge—social media, on-line video, livestreaming, e-commerce—into built-in platforms that present a premier buyer engagement expertise which then can conclude with the customers making a purchase order,” he added.
E-commerce big nonetheless guidelines, for now
This years’ 618 noticed new gross sales data, however development is slowing.
As China’s cellular web inhabitants reaches its ceiling, there are fewer first-time on-line customers to accumulate, forcing the businesses to go after the present web customers. This group tends to take care of a unfastened reference to a specific app and use a number of apps on the identical time.
“It’s the ‘relationships’ and ‘content material’ that triggers on-line purchases, slightly than promotion actions,” in response to Zhuang Shuai, the founding father of Beijing-based consulting agency Bailian. Nonetheless, e-commerce firms are nonetheless popping out on high.
China’s total e-commerce gross sales throughout platforms for the 18 days from June 1 to 18 reached RMB 578.5 billion ($89.6 billion), in accordance knowledge from Syntun. Gross sales grew 26.5% yr on yr, however slowed from a development price of 43.8% in 2020. Progress throughout final yr’s 618 was primarily pushed by recovered consumption demand and authorities help to drum up China’s post-Covid restoration. It’s a giant enhance from 11.8% yr on yr development in 2019.
Syntun’s report reveals that livestream e-commerce has gained traction. Throughout this yr’s competition, gross sales by means of livestreaming reached RMB 64.5 billion, or 11% of the full worth of all items bought.
Alibaba nonetheless leads the pack by way of whole 618 gross sales. The corporate is adopted by JD and Pinduoduo, in response to Syntun. JD was the one firm to launch gross sales figures, whereas all different firms described development in imprecise phrases.
- Alibaba revealed total gross sales knowledge final yr however didn’t launch figures for this yr. The corporate recorded RMB 698.2 billion in gross merchandise quantity final yr. Tmall, the corporate’s business-to-consumer market, greater than doubled the variety of manufacturers it provides on the platform, reaching 250,000 this yr.
- Big reductions are nonetheless a serious promoting level for Tmall, which served up RMB 10 billion in shopper coupons and subsidies for this yr’s competition.
- Livestreaming was one other spotlight for Alibaba. All three of China’s high livestreaming celebrities—lipstick king Li Jiaqi, Viya, and Cherie— aired on Taobao Stay through the competition.
- This yr’s 618 was a giant deal for Alibaba. It was the primary purchasing competition because the firm’s file antitrust tremendous.
JD did launch gross sales numbers. The corporate racked up a file RMB 343.8 billion between June 1 to June 18, up from RMB 269.2 billion final yr.
- The determine represents a development price of 27.7%, decrease than final yr’s 33.6%.
- JD’s 618 advertising campaigns ran between Might 24 and June 20, throughout which greater than 90% of the core manufacturers on its platform participated within the occasion, the corporate stated.
- Round 90% of customers acquired their orders both on the identical day or with subsequent day supply through the competition.
Pinduoduo additionally didn’t publish its total gross sales figures. The corporate stated it provides value-for-money merchandise all year long, so its customers don’t want to attend for purchasing festivals to get good offers.
- The corporate emphasised celebrating the 2 yr anniversary of the RMB 10 billion subsidy program in late Might, slightly than 618.
Suning booked a 117% year-on-year enhance in gross sales quantity of imported magnificence merchandise and a 106% year-on-year leap for imported wellness merchandise, the corporate stated, with out offering concrete figures. Suning stated it noticed a “important enhance” in gross sales of imported merchandise throughout its 618 purchasing competition, in response to the corporate.
Free from pressured exclusivity
With stricter regulation on monopolistic practices, this yr’s 618 was China’s first pressured exclusivity-free purchasing competition of the previous decade.
Compelled exclusivity, which pressured retailers to promote solely on one platform, was broadly adopted by e-commerce firms as they sought service provider assets. This was very true throughout purchasing festivals, when each service provider is scrambling to fill orders.
Huge orders throughout a couple of peak days could lead to over-subscription from consumers. Consequently, platforms signed exclusivity agreements with retailers to make sure enough inventory to fill orders.
Probably the most notable pressured exclusivity incidents occurred throughout 618 in 2019. Dwelling electronics producer Galanz accused Tmall of hiding its merchandise from search outcomes after the corporate rejected Tmall’s plea to take away its listings from rival platform Pinduoduo.
With out pressured exclusivity, manufacturers can record on as many platforms as they need to be able to entry clients, leading to a state of affairs when each e-commerce platform provides an analogous lineup of manufacturers and merchandise. Beneath these circumstances, offering customers with distinctive purchasing experiences, by means of livestream and quick video for instance, might be key to the success of platforms sooner or later.
Nonetheless, the over-subscription situation might persist, resulting in extra stress to meet orders and enhance supply effectivity through the competition.
For e-commerce latecomers like Douyin, eradicating pressured exclusivity ranges the enjoying area, permitting quick video apps that aspire to develop into the e-commerce market to keep away from the cruel battles Pinduoduo confronted when difficult Alibaba a couple of years in the past.