China 618 Procuring Competition for shopper testing after the shutdown of Covid – Reuters

China is in the middle of the “618” shopping festival, an annual event where e-commerce giants in the country like Alibaba and JD.com are trying to attract customers with huge discounts and promotions.

But this year’s edition takes place in difficult circumstances as China grapples with the economic consequences of the re-emergence of Covid-19, which has led to the closure of major cities, including the financial power of Shanghai. Consumer spending has suffered a blow as economists have reduced China’s economic growth prospects.

In the first quarter, JD.com and Alibaba, China’s two largest e-commerce companies, recorded the slowest revenue growth to date, due to a combination of economic slowdowns and intense regulation in the national technology sector.

Last year, the volume of transactions on major e-commerce platforms amounted to 578.5 billion Chinese yuan during the festival, an increase of 26.5 percent over the previous year, according to Syntun.

However, growth is expected to slow this year. EY Consulting said it expects sales to grow 20% this year, slower than the 2021 figure. for e-commerce strive to attract customers with big discounts.

“Overall, we are convinced that the appetite for consumption in China is still strong, but we expect that consumption will be less diverse, with a greater emphasis on organic food, household appliances, personal care, etc. “Wu said in a note.

“As cities reopen, we should expect a huge increase in internet consumption, in addition to returning to stores. While we see a clear downward trend in growth rates for major shopping festivals, each e-commerce platform is presenting its biggest promotional program to date to get consumers back online this summer. »

Alibaba and JD.com are struggling to attract consumers. JD offers customers a discount of 50 yuan for each eligible purchase of 299 yuan.

Alibaba’s online shopping platform Tmall has announced that it will freeze the price of 19 million products by July 5. The company’s cheap buying platform, Taobao Deals, has a million-yuan contract worth 10 yuan.

However, not all analysts have a rosy look. Jacob Cooke, CEO of WPIC, an e-commerce and marketing technology company that helps foreign brands sell in China, said it is unlikely this year’s 618 will set sales records.

“This is probably the first year we will see this [sales] down, ”Cooke told CNBC.

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