China’s annual Singles Day shopping extravaganza is usually a showcase for exuberant consumerism. This year, not so much.
The month of buildup to the event, which ends Friday, has had a lower profile this year as the country enters a new era in which the consumer boom is being dampened by top policymakers and daily lives are being severely affected by abrupt COVID-19 lockdowns.
Alibaba Group Holding, the inventor of the November 11 shopping blitz —the four 1s in “11.11” represents four sticks, a Chinese slang term for bachelors—appears particularly cautious. The Jack Ma-founded company delayed the start of its events for four days to October 24, seemingly an attempt to avoid overshadowing the Communist Party congress, where President Xi Jinping’s new leadership lineup had only been made public the day before.
Alibaba’s top online sales host, Li Jiaqi, who resurfaced in late September after vanishing from public view on the eve of the anniversary of the Tiananmen Square crackdown, is also walking a tightrope. Amid fears that Xi’s “common prosperity” campaign may target more wealthy influencers, Li’s Shanghai-based company, Meione, even rejected reports in state-backed media that Li’s sales on the first day of the Singles Day presale reached RMB 21.5 billion (USD 3 billion), double what they had been the year before, and threatened to sue media outlets over “groundless reporting.”
Although consumption is crucial to China’s economy, Beijing has repeatedly signaled its antipathy to excessive consumerism and has barred celebrities from showing off wealth on social media. With online retail platforms lowering their profiles, sales growth slowed to a record low last year amid an economic downturn, and some analysts predict it will continue to decline this year.
Gross merchandise value (GMV), a term widely used in the e-commerce sector as an indicator of revenues, increased 13% to RMB 952 billion (USD 131 billion) during the Singles Day promotion period last year, the smallest advance ever, according to Bain & Co. The figure includes sales from comprehensive e-commerce platforms like Tmall, JD.com, Pinduoduo, Vipshop, and Suning but excludes video platforms like Douyin and Kuaishou.
Meanwhile, the GMV generated by the 618 shopping festival in June —the second-biggest Chinese shopping festival, launched by JD.com in 2004—grew less than 1% to RMB 583 billion (USD 82.6 billion). GMV includes sales and canceled orders and is thus usually much higher than actual revenues.
The “Double 11” event has expanded from a one-day sale event into a festival nearly three weeks long, starting with a seven- to ten-day presale during which consumers place deposits to secure goods later at discounted prices, and usually reaches its climax on November 11.
From November 1 to 7, total sales of cosmetics and skin care products—one of the mainstays for shopping festivals—plunged 22.4% and 9.7% respectively compared to the same period last year on Alibaba’s Tmall. Kitchen appliances and children’s apparel increased modestly by 7.1% and 3.5%, while pet food and supplies jumped 30%, according to Moojing Marketing Intelligence, a Beijing-based data company.
Bain says the likelihood that this year’s GMV will surpass RMB 1 trillion (USD 141.7 billion) is not high. “The June 2022 installment of JD.com’s 618 event suggests that the relatively modest growth needed for that feat is far from guaranteed,” the company said in a report in October.
“Singles Day and the 618 Festival still generated 12% of all online retail sales in China in 2021. However, the engagement is now being driven more by customer loyalty,” said Kelly Liu, head of the greater China retail practice at Bain.
Singles Day is also taking place as China continues to wrestle with COVID-19, using lockdowns to try to contain the spread of the virus. Dozens of cities are currently implementing various levels of lockdowns, disrupting logistics at a time when deliveries are reaching the peak of the year.
Ray Hu, partner at Ernst & Young, predicted that more offline retailers—which have been severely impacted by the lockdowns—will hop on board with the Singles Day promotion season, putting pressure on online sales.
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Now both Alibaba and JD.com have downplayed GMV and instead are emphasizing customer experience and efforts to lure more merchants to the platforms this year as user growth slows, e-commerce rival Pinduoduo and short video platforms like Douyin and Kuaishou are gradually taking some consumers away from the duo.
A grain seller on Taobao surnamed Chen, whose sales across 12 months usually exceed RMB 10 million (USD 1.4 million), told Nikkei Asia that some of his customers have shifted to Douyin and Pinduoduo, which has led to a 50% drop in Singles Day sales this year. “Consumers are obviously less enthusiastic than previous years,” said Chen.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.