By Jing Zhang & Lisa Nan
Published June 22, 2024
During this year’s 618 festival, China’s retail titans Tmall and JD.com each played to their strengths, reshaping the contours of the retail industry. They utilized advanced technology and strategic partnerships to maximize their impact on this pivotal annual sales event.
Consumer behaviors and priorities have evolved, prompting brands to shift their strategies accordingly. Discounts are now available throughout the year due to the rise of livestreaming and the proliferation of secondary shopping festivals.
“There’s diminished buzz around this year’s 618, but I think that’s more of a reflection of changes to the online shopping landscape rather than of consumer sentiment,” says Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies. “I think the festival reflects positively on sentiment.”
“There was high consumer confidence and a strong appetite for high-end goods. Brands offered exclusive discounts and limited-edition releases, driving significant traffic and sales,” says CEO and founder of market research firm China Trading Desk, Subramania Bhatt.
While fashion, both fast and high-end, reported positive sales boosts this 618, Bhatt notes that eco-friendly products are also gaining traction among consumers, along with personalized and custom-made fashion items.
Tmall and JD.com are navigating shifts in consumer preferences and economic conditions, making notable pivots during this shopping festival. Both are focusing on enhancing the consumer experience to entice sales during sluggish economic times.
Tmall is capitalizing on a shift towards loyalty programs and high-end goods, enhancing its offerings with luxury items and personalized services to attract consumers. Meanwhile, JD.com is focusing on competitive pricing and rapid delivery, aligning with the practical demands of Chinese shoppers in a post-pandemic landscape where value and speed are paramount.
With more Chinese consumers purchasing luxury goods online, Bhatt estimates that this year’s event will see 5% year-on-year growth, with China’s luxury e-commerce sales reaching $35.4 billion (257.4 billion RMB). Online sales now make up 42% of the market.
And while Tmall continues to be the go-to platform, there is a noticeable consumer shift towards JD.com, Pinduoduo, and even social commerce app Xiaohongshu.
By the close of the event on June 18, 365 brands had surpassed $13.7 million (100 million RMB) in sales, with over 36,000 brands doubling their sales from the previous year. A significant contributor to this success was the surge in new 88VIP memberships, which saw a 65% increase year-on-year.
Leading the sales pack were high-profile members of the “10 Billion Club,” including Apple, Midea, Haier, Xiaomi, Moutai, and Nike, each generating exceptional revenue.
Tmall has solidified its leadership in luxury and beauty e-commerce. This year, it featured over 200 high-end brands, including prestigious names from the LVMH and Kering groups, alongside Chanel, Hermès, and Richemont. In a notable departure from tradition, Tmall abandoned pre-sales, opting to offer over 100,000 new and exclusive products directly to consumers.
This approach not only streamlined the purchasing process but also enhanced the exclusivity and allure of the items available. The platform’s data-driven strategy paid off, with 43 beauty brands each surpassing 100 million RMB in sales, demonstrating the effectiveness of personalized recommendations.
“Consumers are increasingly favoring domestic beauty brands, reflecting a trend towards guochao (national trend). There is also a strong demand for skincare products, driven by heightened awareness of self-care,” says Bhatt. “The whole beauty sector continued a robust performance with significant year-on-year growth. Sales were bolstered by targeted promotions, livestreaming events, and collaborations with key influencers and celebrities.”
“Our assessment is that Tmall had a very strong festival, and GMV is up on that platform, suggesting that their recent user-first and content-focused strategy is paying dividends,” adds Cooke. “A range of sub-categories like cosmetics, appliances, and outdoor are seeing growth on Tmall, reflecting updated spending priorities from consumers.”
Tmall Luxury Pavilion also bolstered its sustainability credentials by offering subsidies to customers trading in used luxury items. This initiative appeals to eco-conscious shoppers, promotes brand loyalty, and encourages higher spending.
Strategically enhancing the customer experience, Tmall improved 88VIP member benefits by merging Taobao and Tmall discounts into one system. This year’s festival featured Tmall’s largest investment in consumer incentives yet, with $2 billion (15 billion RMB) in red envelopes and vouchers.
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