The largest shopping festival in China, “Double Eleven,” kicked off its promotional activities last week. However, most businesses and retail industry analysts expect sales to remain flat compared to last year or, at most, achieve lackluster growth. They have noticed that consumers are still very frustrated about China’s economic troubles.
“Double Eleven” originally started as the “Taobao Mall Promotion Day” held by Alibaba’s shopping website on November 11, 2009. It has now evolved into an annual shopping event spanning several weeks across various industries, reaching its peak on November 11.
According to Reuters, furniture retailer Wu Qian mentioned that he registered on JD.com this year as an opportunity to clear inventory and perhaps make a small profit. However, he does not expect the shopping festival to bring overall sales growth.
He stated, “Consumers no longer wait for shopping festivals to make purchases.” The diversification of China’s e-commerce platforms means that consumers have various options throughout the year.
The real estate industry in crisis, trade tensions, and regulatory pressures on various industries have been reasons for China’s sluggish economic growth in recent years. The lackluster economy has further impacted employment.
Data provider Syntun estimates that the total sales volume (GMV) of major Chinese e-commerce platforms only grew by 2% last year, reaching 1.14 trillion yuan (approximately 156 billion U.S. dollars). This is far from the double-digit growth seen in the past.
“Now everything is very calm,” independent e-commerce expert Lu Zhengwang commented. “Suppliers have become more rational, and GMV is no longer the core pursuit, but profit is. However, achieving profit goals is challenging, as competition remains intense, and products can only sell if they are cheaper.”
As Alibaba and JD.com fend off low-price competitors like Pinduoduo, heavy discounts have become a significant feature of China’s e-commerce over the past two years, squeezing the profits of thousands of small businesses.
The CEO of e-commerce consulting company “WPIC Marketing + Technologies,” Jacob Cooke, mentioned, “I think platforms now understand that exerting pressure on brands to lower prices means they have no money to pay for advertising.”
Zheng Li, 46, shared that she used to take “Double Eleven” very seriously, buying clothes and daily necessities enthusiastically. However, this year, she can’t find anything to spark her purchasing excitement. Perhaps, she will buy a down jacket for her son.
In late September, Beijing outlined stimulus measures to support the economy, but many details have yet to be clarified, let alone have a significant impact on consumer confidence.
Deflation has been a persistent issue in the Chinese economy since last year. Deflation prompts families anxious about wage declines to cut expenses. It also leads them to delay purchasing in anticipation of further price drops. This affects business income, suppresses investment, leads to further pay cuts and layoffs, and results in bankruptcies for families and businesses.
On October 22, the National Bureau of Statistics of the Communist Party of China released data showing that the unemployment rate for labor force aged 16-24, excluding students, was 17.6% in September, the second highest this year. As China’s economic troubles persist, millions of young people are facing a harsh job market, with reports of several young job seekers falling victim to fraud in their desperation to find work.