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June 18 gala snares record sales
Last Updated: 2018-06-21 09:03 | China Daily
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E-commerce sites ramp up efforts to create festivals to draw in customers

China's e-commerce boom over the past decade has made many of the country's residents identify themselves as "hand-choppers".

The term is an exaggerated expression for online shopping addicts who vow to chop off their own hands if they continue to buy things they don't need. But, consumers are not the only ones to blame for their excessive spending.

Shopping obsessives now train their sights on June 18, a major mid-year shopping gala that vows to quench their thirst for discounted items before the November shopping festival comes around.

It follows the success story of Alibaba Group Holding Ltd's Singles Day festival, which has made its mark on the world's retail calendar. Now, e-commerce sites are drumming up efforts to create other newfangled holidays to draw in customers with coupons and red packets.

Initially coined by Alibaba's major rival JD to differentiate it from the Nov 11 promotion, June 18 is not yet as well-known, but its influence is steadily on the rise.

"The summer months are traditionally slower in terms of overall retail sales, compared with higher spending from October to February," said Matthew Crabbe, Asia-Pacific research director at London-based consultancy Mintel.

"The June 18 event is therefore helpful in creating more consumer interest in shopping during the summer months than would normally be the case," he said.

For JD, sales during the 18-day promotion that ended on June 18 reached a staggering 159.2 billion yuan ($24.6 billion), closing in on Alibaba's 168.2 billion yuan record from last year's Singles Day.

Sales in the home appliances category surpassed 1 billion yuan in just six minutes, while over 100 million yuan of consumer electronic products were sold in just 51 seconds. Some 10,000 smartphones were sold in the first 21 seconds of the event.

"Since Nov 11 is tightly linked with Alibaba, Tmall and Taobao (the latter being two major shopping sites of Alibaba), JD wanted to create its own shopping carnival that could help it win public recognition and diverge consumption power from the November campaign," said Neil Wang, China president of consultancy Frost & Sullivan.

"It thus focuses more on products used in spring and summer, and digital devices, a sector JD has an edge in," he said.

Data from Fenqile, a shopping site owned by LexinFintech Holding Ltd, echoed such findings, with 80 percent of the online sales via its installment service falling into the category of consumer electronics.

According to Fenqile, its gross sales volume jumped 2.2 times compared with last year, while average spending per customer surged 37.2 percent to 6,895 yuan during the promotion period.

As a latecomer to the June 18 festival, Alibaba prolonged its promotions from a 24-hour extravaganza (in the style of Singles Day) to a 20-day campaign. The company said it has earmarked "tens of billions of yuan" to subsidize purchases of 10,000 brands from home and abroad.

Revenue was staggering at Alibaba's Tmall, the country's largest business-to-consumer site by market share. Sales of Xiaomi's smart gadgets on the platform surpassed last year's promotion within the first 40 minutes, while Lenovo beat its own record within just 10 minutes, Alibaba said, without disclosing specific sales figures.

More than 200 million facial masks were purchased by beauty-conscious shoppers on Tmall, while the ongoing World Cup tournament prompted the sales of 50 million cans of beer and 100 million crayfish on the platform.

"June 18 being a shopping period rather than a day provides customers with ample time to make purchasing decisions, which is also a way to set it apart from Singles Day," Wang said.

NetEase Kaola, which specializes in high-quality imported goods, provided consumers with generous cash rebates and encouraged them to share the benefits on social media to gain more benefits.

The company, which aims to source $11 billion worth of goods from key overseas markets in three years, pledged to offer clients the "lowest possible prices" during the promotion, rivaling JD and Alibaba, and promised to compensate any price gaps.

"It shows that the event now allows for more sophisticated marketing with a build-up effect, rather than the 24-hour blitz that is Singles Day," said Crabbe from Mintel.

The original attraction of discounts could be losing its charm among China's affluent customers, who now place higher value on quality and branding than bargains. But, price remains the central factor for internet retailers who find it "too critical to ignore", said Wang from Frost & Sullivan.

"Online sellers now have to fight for user attention. If any player gives up on one discount festival, others will quickly fill in to gain more online traffic - this is something detrimental to any internet company," he said.

Festivals that want to stand apart from the crowd are addressing a combination of factors, including branding, product quality, logistics, and more. Companies use the gala as a testing ground for much-hailed seamless retail, and are experimenting with ways to merge online and offline retail.

Dada-JD Daojia is a major online-to-offline platform in China that connects online demands with offline merchants. Its sales jumped 5.1 times on June 18 compared with the same day one year ago. According to the company, sales of retail giant Walmart via the platform quadrupled year-on-year, while Yonghui Superstores saw its sales jump fivefold.

For Alibaba, 70 million people using 6 million coupons obtained from previous online purchases participated in a variety of offline promotions held in partnership with more than 70 shopping districts across the country.

"With the ongoing consumption upgrade in China, discounts, coupons and promotion campaigns cannot satisfy the demands of China's growing middle-income group and discerning buyers. The integration of both online and offline retail businesses will be the trend," said Cao Lei, director of the China E-Commerce Research Center.

"Competition among online retailers will concentrate on new technologies, logistics networks and supply chains. E-commerce players should expand their offline consumption offerings and apply more cutting-edge technologies," Cao said.

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