China’s second largest annual shopping festival, 618, has traditionally been a key battleground for the country’s e-commerce companies. But this year, the stakes are higher. E-commerce platforms not only have to contend with each other, but with an ambitious group of short-video and grocery delivery apps looking to grab a piece of the pie. 

Since online retailer JD.com launched the shopping festival in 2010 to mark its anniversary on June 18, the event has grown into a mid-year shopping extravaganza. The festival is second only to Singles’ Day, created by Alibaba in 2009 and held annually on Nov. 11. 

This year, e-commerce sales across platforms grew by a quarter year on year to reach RMB 578.5 billion ($89.6 billion) during the festival, data from China-based data services company Syntun shows. 

E-commerce platforms still hold the home-court advantage, but are defending multiple fronts. New rivals like short video platforms Douyin and Kuaishou offer enticing interactive and social content at a time when e-commerce companies are grappling with the increasingly diverse demands of users.

Upcomers

The decade-old 618 shopping extravaganza is no longer a three-horse race. Gone are the days when Alibaba, JD.com, and Pinduoduo were the only players going head to head. Now, nearly all major Chinese apps are looking to capitalize on the event. 

While it’s not the first time that short video apps Douyin and Kuaishou have taken part in 618, the two companies appear to be getting serious about the event. Neither have released their sales figures for the shopping festival, but both companies are making significant inroads. 

  • Douyin went all-in on 618 promotions this year by hosting  a slew of promotions. The company started its pre-sales campaign as early as May 25. The company also rolled out a game called “The Interaction City” to engage users, and provided commissions to entice merchants. 
  • Douyin didn’t reveal sales figures, but said merchants on the platform nearly tripled their revenue compared with last year.
  • Instead of 618, Kuaishou celebrated its own shopping festival, dubbed 616, on June 16th. Held just two days earlier than 618, the festival is able to capitalize on the shopping season but is unique enough for Kuaishou to brand the festival as its own. Like 618, 616 is a month-long event that spans from May 18 to June 16. The company didn’t release overall figures, but said its sales in May more than doubled compared with a year earlier. 

Varied approaches

While short video apps have large user bases with extended user retention, they have relatively underdeveloped e-commerce ecosystems. 

To make up for this, the apps have taken different approaches to expand their e-commerce businesses, either by integrating online shopping into their platforms to convert awareness into purchases, or by leveraging established advantages in content to expand market share and deepen cooperation with brands, Chris Mulliken, consulting partner at EY, told TechNode.

“Others continue to expand sales conversions but through external links to other platforms,” said Mulliken. Short video apps have also partnered with e-commerce platforms—as long as the retailers only play the role of supplier or logistics service provider.

In the lead up to 618 last year, Kuaishou reached a deal with JD, allowing Kuaishou users to  purchase the e-commerce giant’s self-run products without leaving the short video app. This allowed Kauishou to lock users into its app, while leveraging JD’s stock and delivery capabilities. Douyin struck a similar deal with Suning in 2020.

Grocery delivery

Short video apps aren’t the only one with their sights set on 618, grocery and fresh produce delivery platforms are also upping the ante. Overall sales through on-demand grocery delivery apps, such as JD Daojia and Meituan Shangou, reached RMB 17.8 billion during this year’s 618, Syntun data shows. The Syntun report shows JD Daojia topped the category, followed by Alibaba’s fresh produce delivery service Taoxianda and Meituan’s Shangou.  

  • JD-backed on-demand retail platform JD Daojia doubled sales from June 1 to June 18 compared with the same period last year. On June 18, the peak of the festival, the company set a new sales record of more than RMB 300 million, the most it had ever made in a 24-hour period.
  • Meanwhile, Meituan’s grocery delivery business Meituan Shangou rolled out 618 promotions for the first time, targeting the grocery category.

“In the post-pandemic era, O2O platforms are seizing more opportunities brought by change in consumer behavior and economic recovery”, EY’s Mulliken said.

“We see a future wherein all of these future trends converge—social media, online video, livestreaming, e-commerce—into integrated platforms that provide a premier customer engagement experience which then can conclude with the consumers making a purchase,” he added.

E-commerce giant still rules, for now

This years’ 618 saw new sales records, but growth is slowing. 

As China’s mobile internet population reaches its ceiling, there are fewer first-time online users to acquire, forcing the companies to go after the existing internet users. This group tends to maintain a loose connection with a particular app and use multiple apps at the same time.

“It is the ‘relationships’ and ‘content’ that triggers online purchases, rather than promotion activities,” according to Zhuang Shuai, the founder of Beijing-based consulting firm Bailian. Nevertheless, e-commerce companies are still coming out on top.

China’s overall e-commerce sales across platforms for the 18 days from June 1 to 18 reached RMB 578.5 billion ($89.6 billion), according data from Syntun. Sales grew 26.5% year on year, but slowed from a growth rate of 43.8% in 2020. Growth during last year’s  618 was mainly driven by recovered consumption demand and government support to drum up China’s post-Covid recovery. It’s a big increase from 11.8% year on year growth in 2019.

Syntun’s report shows that livestream e-commerce has gained traction. During this year’s festival, sales through livestreaming reached RMB 64.5 billion, or 11% of the total value of all goods sold. 

Alibaba still leads the pack in terms of total 618 sales. The company is followed by JD and Pinduoduo, according to Syntun. JD was the only company to release sales figures, while all other companies described growth in vague terms. 

  • Alibaba published overall sales data last year but did not release figures for this year. The company recorded RMB 698.2 billion in gross merchandise volume last year. Tmall, the company’s business-to-consumer marketplace, more than doubled the number of brands it offers on the platform, reaching 250,000 this year. 
  • Huge discounts are still a major selling point for Tmall, which served up RMB 10 billion in consumer coupons and subsidies for this year’s festival. 
  • Livestreaming was another highlight for Alibaba. All three of China’s top livestreaming celebrities—lipstick king Li Jiaqi, Viya, and Cherie— aired on Taobao Live during the festival. 
  • This year’s 618 was a big deal for Alibaba. It was the first shopping festival since the company’s record antitrust fine. 

JD did release sales numbers. The company racked up a record RMB 343.8 billion between June 1 to June 18, up from RMB 269.2 billion last year. 

  • The figure represents a growth rate of  27.7%, lower than last year’s  33.6%. 
  • JD’s 618 marketing campaigns ran between May 24 and  June 20, during which more than 90% of the core brands on its platform participated in the event, the company said. 
  • Around 90% of consumers received their orders either on the same day or with next day delivery during the festival.

Pinduoduo also did not publish its overall sales figures. The company said it offers value-for-money products throughout the year, so its users don’t need to wait for shopping festivals to get good deals. 

  • The company emphasized celebrating the two year anniversary of the RMB 10 billion subsidy program in late May, rather than 618.

Suning booked a 117% year-on-year increase in sales volume of imported beauty products and a 106% year-on-year jump for imported wellness products, the company said, without providing concrete figures. Suning said it saw a “significant increase” in sales of imported products during its 618 shopping festival, according to the company. 

Free from forced exclusivity

With stricter regulation on monopolistic practices, this year’s 618 was China’s first forced exclusivity-free shopping festival of the past decade. 

Forced exclusivity, which forced merchants to sell exclusively on one platform, was widely adopted by e-commerce companies as they sought merchant resources. This was especially true during shopping festivals, when every merchant is scrambling to fill orders. 

Massive orders during a few peak days may result in over-subscription from buyers. As a result, platforms signed exclusivity agreements with merchants to ensure sufficient stock to fill orders.

One of the most notable forced exclusivity incidents occurred during 618 in 2019. Home electronics manufacturer Galanz accused Tmall of hiding its products from search results after the company rejected Tmall’s plea to remove its listings from rival platform Pinduoduo.

Without forced exclusivity, brands can list on as many platforms as they want in order to access customers, resulting in a situation when every e-commerce platform offers a similar lineup of brands and products. Under these circumstances, providing users with unique shopping experiences, through livestream and short video for example, could be key to the success of platforms in the future. 

However, the over-subscription issue could persist, leading to more pressure to fulfill orders and increase delivery efficiency during the festival. 

For e-commerce latecomers like Douyin, removing forced exclusivity levels the playing field, allowing short video apps that aspire to expand into the e-commerce market to avoid the harsh battles Pinduoduo faced when challenging Alibaba a few years ago.

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.