How Chinese consumers are spending this Singles Day shopping festival

BEIJING – Early indicators from China’s biggest shopping event of the year show a rebound in certain categories, amid expectations of relatively modest growth in overall sales.

The Chinese version of Black Friday started on October 14, more than a week earlier than last year, when e-commerce players Alibaba.com And JD.com struggling with tepid consumer spending. The shopping festival, also known as Singles Day or 11.11, has grown into a weeks-long promotional period in recent years since Alibaba launched it on November 11 in 2008.

“What we see so far will be slightly better in terms of GMV growth than last year,” Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, told CNBC. Thursday. The company helps foreign brands – such as Vitamix and IS Clinical – sell online in China and other parts of Asia.

GMV refers to gross merchandise value, an industry measure of sales over time. The Chinese e-commerce giants stopped reporting Singles Day GMV in 2022 amid the pandemic. In 2021, Alibaba said its GMV rose 8%, while JD’s rose 28%, for a total of more than $139 billion.

Singles Day GMV reached 845 billion yuan ($119.1 billion) this year as of October 30, according to research agency Syntun. It was not clear how the GMV figures compared to 2023 given the extended promotional period this year.

About 80%, or roughly $95 billion, came from Alibaba, JD.com and PDDwhile nearly 20% was generated through livestreaming sales platforms Kuaishou and ByteDance’s Douyin, the Syntun report showed.

Although Singles Day GMV is no longer growing at 30%, Cooke expects growth of about 15% this year, better than the 11% increase in 2023, when the festival lasted 19 days, according to his company’s data.

“Experience-based things are starting to do really well, less like Louis Vuitton luxury and more like lululemon, which is what we’ve been saying about this for a while,” Cooke said. “It’s just that consumer habits have really changed.”

Sales on Singles Day will be boosted by China’s home appliance trade-in subsidies, which were launched at the end of July. Chinese authorities have begun doubling down on their stimulus efforts since late September, cutting interest rates on existing mortgages and signaling further support.

“We believe [the] This year’s 11-11 festival will be a pivotal point and is ready to reflect on the recovery path in the third and fourth quarters of 2024,” UOB analysts Kay Hian said in a report.

They predict 4% to 5% growth in Singles Day GMV, with sales in the home appliance category supported by the trade-in program.

Alibaba said government subsidies and platform benefits contributed to a more than sevenfold increase in home appliance pre-sales during the first hour of Oct. 14, compared with the first hour of pre-sales last year.

JD.com said transaction volume increased between Oct. 14 and Oct. 31 grew by double digits versus the same period a year ago. The company claimed record sales in consumer electronics and home appliances, without releasing figures.

“This year, it appears that the price war of e-commerce platforms has subsided overall and is returning to a certain degree of rationality after intense price competition,” Dave Xie, partner at Oliver Wyman, said in a statement. He also noted Beijing’s stimulus announcements and a recovery in consumer confidence.

“In the early stages of Singles Day, categories such as home appliances and consumer electronics, outdoor goods, beauty and cosmetics and pet supplies have all performed well,” Xie said.

A consumer trend that has emerged this year involves toys and collectibles, often from a game or popular animated series. In China, this category is commonly called IP.

“A lot of international brands have been fighting for licenses to come in here and do this,” Cooke said.

There is always “a micro trend in every year of 11.11 and this really seems to be the case this year,” he said. “Something like that came out of nowhere, and suddenly ended up in very, very large numbers.”

More than 100,000 products based on licenses for more than 1,000 characters – such as the games Genshin Impact and Arknights – will launch on Alibaba’s Tmall this Singles Day, according to Yuke Liang, a representative of the company’s designer and collectible toys category. Products include collectible cards, figurines and clothing.

The category also includes Lego and British toy company Jellycat, which launched a plush Valentine’s Day dog ​​in China for Singles’ Day, Liang said. The 7,000 dogs, which cost about $50 each, sold out in seconds, she said.

Japanese manga Chiikawa opened a Tmall store in late September and saw more than 100,000 shoppers order $9.72 at the same time. limited edition plush toy, Liang said.

Liang said Taobao and Tmall started developing the IP category in 2017 and elevated it to one of the few segments in terms of product promotion and business priority in 2021. She said most buyers are in their early 30s or younger and prefer to spend money on products believed to bring happiness or other emotional satisfaction.

Despite such growth periods, Chinese Singles Day remains more austere than in previous years.

“The sentiment is very different this year, much calmer,” wrote Ashley Dudarenok, founder of ChoZan, a Chinese marketing consultancy. “Chinese consumers are not getting caught up in the buy-buy-buy frenzy they are chasing [for] more expensive products that they actually need versus just lower prices.”

She expects Singles Day this year will be, at best, “slightly better” and driven by different categories.

The store promotions officially end on November 11th.

James Yang, head of Greater China retail at consultancy Bain & Company, said the company has “dampened” expectations for Singles Day this year, continuing the trend of the past two years.

JD will announce quarterly results on November 14, while Alibaba will report earnings on November 15.