Chinese consumers are spending less, causing concerns about the potential impact on the upcoming Singles’ Day online shopping event.
Singles Day, also known as “Double 11,” was popularized by e-commerce giant Alibaba. In the days leading up to the event, sellers on Alibaba and elsewhere often slash prices and offer enticing deals.
Due to concerns about employment and a sluggish real estate market, it is uncertain how successful this year’s festival will be.
A recent survey conducted by Bain & Company on 3,000 Chinese consumers revealed that over three-quarters of the participants intend to decrease their spending or maintain their current level of spending due to uncertainties surrounding the state of the economy.
This includes individuals such as Shi Gengchen, whose billiard hall venture in the popular Chaoyang neighborhood of Beijing has experienced a deceleration.
Shi stated that the state of the economy was poor and had impacted his business. He noted a decrease in customers compared to before, with his sales only reaching 40% of pre-pandemic levels.
“I don’t splurge,” he stated. “Naturally, everyone has the urge to splurge, but it requires having the funds to do so.”
Prior to the impact of COVID-19 in 2020, Chinese shoppers were highly enthusiastic about spending money. On Singles’ Day in 2019, they collectively spent $38 billion within a span of 24 hours on Alibaba’s online shopping platforms.
According to analysts, the Chinese have become more hesitant when it comes to spending money on additional items.
According to Shaun Rein, the founder and managing director of China Market Research Group based in Shanghai, the enthusiasm and buzz surrounding Singles’ Day has died down. He explains that consumers have been receiving discounts regularly over the past nine months, so they are not anticipating significant discounts on Singles’ Day, except for products that are regularly consumed.
According to Rein, customers will probably be more interested in purchasing discounted everyday essentials such as toothpaste, tissue paper, and laundry detergent rather than expensive cosmetics and luxury labels.
Hu Min, who works at a convenience store in Shijiazhuang city in the northern province of Hebei in China, stated that she now only purchases essential items and does not spend on anything else.
She expressed that she believes individuals are not spending as much as they used to, potentially due to financial constraints.
In Beijing, 28-year-old Gao Di stated that she has not been significantly impacted by the economic decline, but she no longer makes purchases solely because of the festival. However, she will take advantage of Singles’ Day sales by waiting until the event to place her orders for desired items.
Gao, who is employed in the insurance field, stated that it could be due to a shift in her perspective.
The focus of e-commerce platforms this year is on offering discounted prices during the festival, in order to appeal to budget-conscious shoppers searching for bargains. Alibaba’s Tmall is promoting “Lowest prices on the web” for their 2023 campaign, while JD.com’s slogan for their Singles’ Day campaign is “Truly cheap.” Competitor Pinduoduo’s tagline is “Low prices, every day.”
Certain tactics implemented by the company contributed to increased sales.
On Sunday, JD.com announced that their sales, orders, and user numbers reached a new peak during the festival, although they did not disclose exact figures. They also reported that over 60 brands made sales of 1 billion yuan ($137 million) or more, and that nearly 20,000 brands experienced a transaction volume increase of more than three times compared to last year. The retailer previously stated that their new merchants saw a fivefold increase in the number of orders compared to last month.
According to Lu Fei, a senior researcher at JD.com’s Consumption and Industry Development Research Institute, the company’s sales data indicates a clear increase in consumption.
Lu stated that the increasing sales of mobile phones, jewelry, and domestic appliances indicate a demand for high-quality products. However, it is evident that consumers are becoming increasingly rational.
According to an article on Alibaba’s Alizila news hub, approximately 400 brands achieved a gross merchandise value of over 100 million yuan ($13.7 million) and 38,000 brands saw their GMV double compared to the previous year as of midnight on Saturday. The company’s Taobao and Tmall Group also experienced growth in order numbers and other areas during the festival, as reported.
According to China’s State Post Bureau, express delivery companies experienced a surge in business during the festival, reaching a new high. On Saturday, these companies collected approximately 640 million express packages across the country, marking a 15.8% increase compared to last year.
According to Jacob Cooke, who is a co-founder and CEO of WPIC Marketing, a consultancy specializing in e-commerce, the current situation in China’s property market may lead to a decrease in spending on long-lasting goods like household appliances. As people feel less secure about their finances, it is predicted that they will opt for more affordable brands.
“According to Cooke, the data reveals a significant desire among middle and upper-class individuals to invest in experiences and products that improve their well-being, lifestyles, and self-expression. This trend is evident in areas such as vitamin supplements, pet care, and athletic clothing.”
This report was contributed to by AP researcher Yu Bing and video producer Caroline Chen in Beijing.