China is renowned for the many e-commerce shopping festivals taking place throughout the year, which are a great opportunity for customers to buy highly discounted products as well as for brands to increase sales and to acquire visibility in the market.
With China being the world’s largest e-commerce market, brands of every kind are planning some of the best promotions to be deployed during 618. This festival is usually taken into high consideration because it’s a great opportunity for brands and marketers to spot the latest trends that could shape their strategies in the second half of the year. In addition to this, this year’s 618 will also be the center of attention by virtue of being the first significant e-commerce festival taking place after the COVID-19 outbreak.
618 is a mid-year festival taking place from June 1st to June 18th, hence the name. It was launched in 2010 by JD.com to celebrate its founding anniversary (6/18) but during the past few years other Chinese e-commerce giants have also joined this festival by heavily promoting special festival-like promotions on their platforms.
E-commerce festivals are all about numbers, which can be measured according to a series of criteria such as year-on-year (YOY) increase, gross merchandise volume (GMV), new users, specific category sales and overall sales, to name a few. Based on the numbers achieved in 2019, it’s easy to understand why 618 is now considered one of China’s top e-commerce festivals:
JD achieved a YOY increase of 26.6% with over RMB 200 billion (US$31.5 bn); 京东实现同比增长26.6%，超过2000亿元人民币（315亿美元）；
Pinduoduo reached +300% for its GMV; 拼多多GMV达到+300%；
Alibaba gained +300 million users after the festival; 阿里巴巴节后新增了3亿用户；
Within the first minute of the festival launch, the sales of beauty care products broke through RMB 100 million (US$14 million). 一分钟内，美容保健品销售额突破1亿元人民币（1400万美元）。
As China’s market landscape continuously evolves, it’s essential for brands and marketers to understand the country’s dynamic trends. In this regard, similarly to other major festivals, 618 offers great insights on consumers’ behavior. These are the major trends which have emerged from the previous 618 festival.
Lower-Tier Cities 中小城市
There is a growing consumption in third, fourth and fifth tier-cities, namely China’s smaller cities and towns. This is due to the fact that residents in these cities have an increasing access to disposable income and an increasing interest for high-quality goods, as demonstrated by the fact that Alibaba’s gross merchandise volume from these cities grew by 100% YOY during the period, along with 70% of Pinduoduo’s physical goods were sold in lower-tier regions. Interestingly, although consumers in Shanghai, Beijing and Guangzhou (first-tier cities) still dominated 618 sales, the top three cities with the most accelerated sales performance in 2019 were Beitun and Tumxuk in Xinjiang, and Qingdao in Shangdong province.
Consumers are showing an increasingly stronger preference for premium products. This trend is particularly noticeable in lower-tier cities and younger generations, especially those labeled with the moniker “small-town youth”. In fact, most e-commerce platforms saw the number of consumers under 25 years old who purchased luxury products rise by 50%. Overall, Chinese consumers seem to be paying increasingly more attention to high-quality products, whether that be for a healthier lifestyle or for the desire to treat themselves with luxury goods.
Younger Generations 年轻一代
Among the data collected during 618, another major trend that emerged is represented by the fact that most e-commerce festivals’ consumers belong to younger generations. For example, nearly 80% of Pinduoduo’s sales during the 618 campaign came from users born in the 1980s and 1990s. This fact puts younger generations’ favorite products under the spotlight during e-commerce festivals. To name a few categories, on Tmall within one hour since the beginning of 618 in 2019 the sales of eye-cream went up by 300%, followed by perfumes up by 290%, and lipsticks up by 239%. In addition, within the first 17 minutes the revenue coming from baby and maternity products reached more than RMB 500 million.
What to Expect for the Upcoming 618?
Next week the 2020 edition of 618 will begin, even though many promotions are already available online since mid-May. This year more than ever all eyes are on 618 to observe Chinese consumers’ trends in terms of assessing the real potential of post-COVID-19 revenge spending, as well as spotting the categories of interests in which brands should focus on for the second half of the year, and understanding the new domestic market dynamics.
If you’re interested in getting more information about China’s e-commerce festivals, don’t hesitate to get in touch with Eastant team!