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One of the biggest shopping festivals in the world, China’s Singles Day sales ended with subdued results amid a struggling economy. Held on November 11 every year, the Singles Day saw e-commerce players as well as physical stores offer massive discounts to boost sales. Originally, a 24-hour long festival, it now usually has weeks of shopping promotion activities lined up.
However, apparently, even the discounts failed to impress customers this year. Data by market research firm Syntun revealed that the growth in likely cumulative gross merchandising volume (GMV) sales across platforms slowed to 2.08% to 1.14 tn yuan ($156.40 bn) against the 2.9% growth posted last year.
Alibaba and JD.com do not reveal exact numbers
JD.com stated that growth in its transaction and order volume touched record highs – without releasing the exact numbers. Meanwhile, Alibaba indicated an increase in its gross merchandise value, order numbers and participating merchants when compared to the previous year.
In terms of brand sales data, JD.com reported that Apple products surpassed 10 bn yuan ($1.39 billion), while a relatively new brand in the Chinese market, Canadian multinational athletic apparel retailer Lululemon, witnessed a 260% surge from the comparable period last year. While Alibaba.com did not disclose brand-specific details, it said that sales of racing bikes increased by 300% in the first hour of sales. On the other hand, Xiaomi revealed that its Xiaomi 14 smartphone was the bestseller on Alibaba’s Tmall in the week between November 4 to November 11.
Interestingly, Alibaba planned to go aggressively on slashing prices ahead of the festival to compete against deeply discounted platforms like Douyin and PDD Holdings’ Pinduoduo. Not just this, Alibaba also leveraged AI robots for its platforms Tmall and Taobao to address customer queries. According to Alibaba, merchants used Taobao and Tmall’s AI tools approximately 1.5 billion times between October 1 and November 6.
While both the e-commerce giants pointed to upbeat sales, it is worth noting that they did not report the exact sales figure for Singles Day for the second straight year. China’s Singles Day sales are considered the barometer of consumer sentiment in the nation, but Alibaba and JD.com not revealing the data makes it difficult to judge the track of consumer confidence.
Shoppers get conscious of economic headwinds
Earlier last week, consultancy firm Bain & Co revealed the result of its survey of over 3,000 Chinese shoppers according to which 77% expressed that they would spend less this year. The consultancy emphasised that this isn’t surprising since the result reflects macroeconomic headwinds, muted consumer confidence, and property market woes. Moreover, as the buyers get more discrete with their spending, they intended to spend more on clothing, groceries, and personal necessities instead of luxury spending, as per Bain & Co’s findings.
According to Paris-based thinktank QuantCube Technology, the pickup in consumer demand post-covid reopening proved short-lived. It stated that as people are now more focused on repaying debt and building savings, they wouldn’t spend more. “This lack of spending can lead to a decline in production, job losses, and a vicious cycle of further reduced spending, notably on the consumption of durable goods highly related to housing (appliances, furniture, etc.) and can often explain a reduction in new households forming, due to adverse economic conditions and poor confidence,” explained QuantCube.
On the other hand, the Chinese economy expanded at a faster-than-expected pace for the third quarter of 2023 and stronger retail sales were one of the key reasons for it. In September alone, China’s retail sales rose 5.5% year on year indicating a rebound in consumption.
“In each of the first three quarters of this year, household consumption growth on a year-on-year basis was faster than income growth, which signals an improvement in consumer confidence,” said Andy Rothman, Investment Strategist at Matthews Asia.
“The government has acknowledged the confidence problem and taken a series of steps to restore trust. That is not enough, but the resilience of the Chinese people and the pragmatism of the government suggest that further policy changes are coming and are likely to succeed. This process will be slower than investors would like, so the pessimistic narratives about the Chinese economy, and the domestic equity market, may not reverse immediately – but the trend is moderately positive,” opines Rothman.
