On Wednesday, June 19, a third-party data estimate revealed that amid China’s sluggish economy, the sales volume of the “618” mid-year e-commerce shopping festival saw its first-ever decline in history. Young consumers are tightening their belts, with some college students expressing that their wallets are empty.
According to data provided by digital retail analytics company Syntun, during the 618 shopping event, the total Gross Merchandise Volume (GMV) of transactions on major Chinese online platforms decreased by 7% compared to the same period last year, reaching only 742.8 billion yuan (approximately 102.36 billion US dollars).
In China, 618 is the second-largest annual sales event after “Double Eleven.” Even amidst the COVID-19 pandemic, 618 sales had been growing and reached a peak in 2023, as per Syntun’s data.
Industry experts reported to Reuters that this year’s shopping festival failed to ignite consumer enthusiasm. With the economy facing challenges, major platforms extended their promotional periods by several weeks to attract consumers to loosen their purse strings.
The 618 shopping festival was first launched in 2010 as a one-day promotional event.
E-commerce giants like JD.com and platforms under Alibaba Group such as Tmall and Taobao opted to cancel the traditional pre-sale period this year, where consumers could pay a deposit during the pre-sale period before completing their purchase. Instead, they extended the promotional period.
On June 17, China’s National Bureau of Statistics released macroeconomic data for May. According to Sina.com, Wang Qing, the Chief Macro Analyst at Orient Securities, mentioned that from January to May, the total retail sales of consumer goods increased by 4.1% year-on-year, only half of the average growth rate before the pandemic. He attributed the ongoing consumer weakness to weak consumer confidence and a decline in disposable income.
China is grappling with persistent real estate crises and high unemployment rates, which have severely dampened consumer confidence. Stimulating consumption through discounts is no longer effective.
Jacob Cooke, CEO of e-commerce consulting company WPIC Marketing + Technologies, told Reuters, “Because there are discounts throughout the year, the fervor for 618 has cooled down.”
Anita Meng, a student from Hangzhou, told Reuters, “To be honest, I haven’t paid much attention to 618 because there are just so many shopping festivals going on.”
“Even though these festivals continue, my wallet is already empty,” she said. For this 618, she only bought one item – a gaming chair for her brother – which was discounted from over 1,200 yuan to 1,000 yuan.
Analysts pointed out that subdued demand has led retailers to remain stuck in price wars and low-profit margins, exacerbating deflationary pressures.
“Low prices” have become a common feature in China’s consumer market, making it increasingly challenging for e-commerce platforms to retain customers, even during traditionally successful sales festivals.
After analyzing the discount strategies of luxury brands during this year’s 618, consultancy firm Re-Hub found that among the brands they tracked, 20% increased their average discount, while nearly half either maintained or decreased their average discount compared to last year.