When life changes, people buy different things. And we are seeing some interesting trends in what people are buying online during the extended quarantined. From private and publicly accessible databases, such as Shengyi Canmou, a platform that tracks sales data from Alibaba’s Tmall, Meituan, and installment sales outlet Fenqile, we are able to take a more granular look at China retail trends by product category, identifying some bright spots.
These include growing demand for grocery and cooking products, home cleaning products, personal care products, medical products, and (maybe) electronic products—what people are buying reflects that they’ve been at home for a month.
The big picture for China retail is sobering: the industry has been hit hard. Data from Peking University’s Digital Finance Research Center and Ant Financial shows that in the two weeks following the end of the normal public holiday, 39.5 million businesses run by individuals were closed—40.4% of all such stories tracked in the data set.
Deborah Weinswig is CEO and Founder of Coresight Research, a research and advisory firm that provides future-focused analysis and consulting on the intersection of retail, technology and fashion. This piece was co-authored by Echo Gong and Eliam Huang.
Sales from these businesses dropped by 52.4%, around RMB 264 billion (about $38 billion). For online sales, Alibaba’s CEO Daniel Zhang said during Alibaba’s earnings call that apparel and consumer electronics were not doing well during the epidemic period.
The Covid-19 outbreak has resembled a very long holiday. Even now, life is not totally back to normal. Local governments extended the Chinese New Year public holiday. What would normally have been an eight-day holiday from Jan. 24 to Jan. 31, became a 10-day holiday which ended Feb. 2. At the same time, cities such as Wuhan were closed down, over 70 airlines suspended or reduced flights to and from China, and local authorities imposed quarantines and advised people not to go to public places. Furthermore, schools extended winter breaks and have moved to remote lessons indefinitely, and companies are encouraging remote work even though the Lunar New Year holiday has officially ended. In short, most of China has been at home for more than a month.
Grocery and cooking products
Across China, people have been cooking at home rather than venturing into public to dine out. In fact, most restaurants had already closed during the Spring Festival holiday, but as the outbreak spread, fears of contagion kept food and beverage venues from reopening, prompting a surge of interest in both recipes and kitchenware from home cooks. For the online group-buying platform Pinduoduo, egg poachers were included in the “Top Ten Best Selling Product List” for the period of Jan. 24 to Feb. 14.
According to Meituan, China’s largest local services platform, online searches for baking goods jumped a hundredfold during the Lunar New Year holiday. Sales of condiments also increased more than eight times during the same period. Instant noodles were the most popular food on Meituan among consumers born after 1990, with a sales volume of 15.9 million.
Young consumers went for convenient foods
Top five foods bought on Meituan during the Lunar New Year holiday by consumers born after 1990.
Between Jan. 24 and Feb. 2, sales of vegetables on JD.com increased by 215% over the same period a year ago. Data from JD.com also shows that the vegetables category saw the highest sales growth during the Chinese New Year holiday, with sales increasing by nearly 450% compared with the same period in 2019.
Home cleaning products
Likely encouraged by the Chinese government’s advice to clean frequently touched surfaces and objects regularly to prevent the spread of the coronavirus, demand for home cleaning products has surged dramatically. Data from Shengyi Canmou shows that January sales of home cleaning products have jumped 210% year-on-year, as shown below.
Between Jan. 25 and Feb. 23, Tmall’s most popular store by sales value in the home cleaning category was Weica, a Chinese brand that sells antibacterial sprays. Total sales from the Weica Tmall store reached RMB 33.6 million during that period.
Personal care products
The Covid-19 outbreak has also boosted sales of personal hygiene products. On JD.com, 1.8 million bottles of disinfectant solution and 3 million bottles of liquid soap were sold during the Chinese New Year holiday. According to data from Shengyi Canmou, the total sales value of the body wash category increased by 96.9% to RMB 438 million in January 2020, compared to January 2019.
While TMall defines the category includes bath soap, bath cream, shower gel, handwash, bathing herbs, and intimate wash, this growth appears to have been on the medical side of the category. Shengyi Canmou’s data also shows that between Jan. 25 and Feb. 23, total sales from the Tmall flagship store of antibacterial brand Dettol reached RMB 22.7 million, making it the top store by sales in the body wash product category.
Before the coronavirus outbreak, most people in China got medicine from public hospitals. According to online pharmaceutical platform Menet, sales revenue (in Chinese) for medicine in China was RMB 171.3 bilion in 2018, of which, RMB 115.4, or 67.4% of total sales revenue, came from public hospitals, while RMB 9.9 billion, or 1% of total sales revenue, came from online stores.
During the Covid-19 epidemic, many people in China have turned to online retailers to buy medicine as more consumers are looking for medicine and supplements which they believe will help them to battle the virus and consumers’ attempts to reduce person-to-person contact have cut down on visits to brick-and-mortar pharmacies. Meituan’s data shows that 200,000 packs of Chinese herbal granules (a remedy for colds) and 200,000 vitamin C supplement products were sold during the 10-day’s Chinese New Year holiday. Many elderly consumers are also choosing to shop via online medical services in order to have medicine delivered directly to their homes. Sales of prescribed drugs for chronic diseases, such as hypertension and diabetes, rose by 237% on Meituan during the holiday.
Electronics are a mixed picture. Alibaba, which presented a broadly pessimistic picture of online sales during its recent earnings call, picked out electronics as down during the virus period. But Fenqile, a smaller player that focuses on installment sales and is the only company to release numbers for the category, saw substantially increased sales in its published data.
Schools have been closed indefinitely pending the progress of the coronavirus outbreak, which has led to a flurry of experimentation with online education. Many adults also accessed online education during the prolonged holiday, as well as working remotely rather than returning to their offices. These changing behaviors may have driven sales of computer-related products, such as laptops and keyboards.
According to Fenqile, sales of laptops on its platform increased by 50% between Feb. 6 and 20, compared to the same period last year; sales of peripherals such as earphones, keyboards, and mice also saw an increase of 30–50% during the same period. Fenqile also noted that the average daily sales of used iPads increased by 40% in February compared with January.
Social distancing, voluntary isolation mandated by authorities and increasing awareness on wellness and health during the Covid-19 outbreak have driven demands for products such as grocery and cooking products, handwash and soap, medicine and laptops and computer-related products. At the same, sales of non-essentials from offline retailers are seeing a big drop during the holiday season. For example, Adidas has seen its business activity tumble around 85% since the first day of Lunar New Year. Alibaba said during its most recent earnings call that apparel and consumer electronics were not performing well.
As people’s life in China will eventually move back to normal, we expect demand for groceries and electronics from online stores will gradually move back to pre-virus levels. Offline grocery stores, restaurants, and offline electronics stores offer better selections, experiences not available online, or a chance to try products before buying. At the same time, demand for disinfection and home cleaning products from online stores might remain strong, as we expect many consumers to maintain healthier habits and an interest in wellness beyond the outbreak period, and offline stores have no real advantages in these products.