Lower-tier cities, upgraded goods power JD’s 618 shopping promotion

2 min read
JD’s 618 mid-year shopping festival press conference in Beijing on June 18, 2019.. (Image credit: TechNode/Nicole Jao)

As this year’s 618 mid-year shopping festival indicates, China’s consumer market is still showing signs of life despite a slowing economy.

Chinese retail giant JD, which started the 618 shopping promotion in 2010, racked up a record RMB 201.5 billion (around $29.2 billion) in sales from June 1 to 18. The figure was a 26.6% increase from last year’s RMB 159.2 billion, and was driven by growth in various categories from consumer goods, electronics, fresh food, fashion, and lifestyle items, according to the company. JD said that it served around 750 million customers around the world during the festival.

This year’s mid-year shopping festival featured upgrade trends in China’s consumer market, Xu Lei, CEO of JD retail noted in an internal letter (in Chinese) to employees on Tuesday. High-quality brands and pricier imported goods were especially popular among consumers, he said.

Another highlight was the rise of consumers in lower-tier cities. Liu Hui, director of JD Big Data Research Institute, said yesterday at JD’s 618 press conference that consumers in lower-tier cities were driving sales growth during the promotion. Sales contributed by sixth-tier cities are growing the most rapidly, Liu said. Consumers in third- and fourth-tier cities seem are showing interest in brands and products similar to their counterparts in top tier cities, the company data show.

Combining online and offline shopping for a “boundary-less retail” (JD’s term for new retail) experience, the company is partnering up with millions of stores and experience centers around China. During the 618 festival, Dada JD-Daojia, JD’s online-to-offline (O2O) e-commerce platform, doubled sales compared with the same period last year.

JD rival Alibaba also offered promotions for the festival, but revealed fewer details on its sales. Within the first hour, from midnight to 1:00 a.m. June 1, GMV surpassed that of the first 10 hours last year, the e-commerce giant said. Alibaba engaged Tmall users with new features such as Taobao Livestreaming, and “Flash Sales” and “Daily Deals” channels.

Annual shopping events like JD’s 618 and Alibaba’s November 11 Singles’ Day are showdown moments for e-commerce players, where they compete for consumer attention with promotional campaigns and special discounts.

China’s e-commerce space, long dominated by JD and Alibaba, has become increasingly competitive with newcomers like Pinduoduo entering the space. The Shanghai-based social e-commerce upstart, which launched a joint “RMB 10 billion” subsidy plan with brands and merchants for the promotion, saw GMV exceed 300% year-on-year during the same 18-day sales period. The company said it received more than 1.1 billion orders, 70% of which came from lower-tier cities.

However, JD’s mid-year shopping gala, along with a series of shopping festivals such as Alibaba’s Double 12, are on a smaller scale than Singles’ Day, during which Alibaba recorded GMV of a whopping RMB 213.5 billion in one day in 2018.

JD shifted its direction from brick-and-mortar to e-commerce in 2004. The same year, the company started rolling out online promotional campaigns and discounts to celebrate its anniversary. The 618 mid-year shopping festival was officially launched in 2010 and has since become a nationwide shopping promotion for large and small e-commerce players across the country.

With contributions from Emma Lee.