China's extended 618 shopping fest fails to stir excitement

China's biggest midyear shopping festival, 618, ended on Wednesday evening without much fanfare after more than a month of promotional events aimed at enticing consumers to part with more of their hard-earned money.

Originally a single-day celebration marking the founding of e-commerce giant JD.com on June 18, the festival has expanded to include all e-commerce platforms with ever-lengthening sales periods.

This year presale for JD.com and Alibaba kicked off on May 13, making the shopping festival longer than a month.

China's retail sector continues to struggle due to concerns about employment stability, stalled wage growth and the property crisis, leaving shoppers in no mood to splurge.

Retailers and the government have sought to lift subdued spending by deepening discounts and expanding consumer subsidies. Though extending the sales period is likely to help sales growth for this year's 618 period, analysts say, longer festivals and year-round discounts on e-commerce platforms have dampened excitement for these events.

“I don't have anything special to buy during the 618 shopping festival. There are always great deals, I can buy whatever I need whenever,” said Xu Binqi, who works in Beijing's film industry. “Take skincare products as an example. I buy them whenever I run out and the prices are no higher than during the 618 festival.”

Rachel Lee, GM of market research firm Worldpanel China and co-author of Bain & Co's recent China Shopper Report, said when consumers are budget-conscious they seek affordable alternatives and discounts play a lesser role.

“Stand-alone promotional discounts will find it increasingly difficult to drive volume growth,” she said.

Major e-commerce platforms have not disclosed sales figures for 618 in recent years, but according to data provider Syntun, sales during the midyear festival last year fell for the first time in 2024, down 7% at 742.8bn yuan (R1.86-trillion) from the year before.

This year, JD.com said the number of users placing orders for the 618 event has more than doubled year-on-year, with more than 2.2-billion orders across its online, offline and food delivery platforms.

Alibaba said 453 brands surpassed 100m yuan (R251m) in gross merchandise volume (GMV) over the 618 period.

Brands that surpassed 1bn yuan (R2.51bn) in GMV included Apple, Xiaomi, Huawei, Nike, Adidas, L'Oréal and Lululemon, Alibaba added. GMV is a metric used by e-commerce companies roughly analogous to sales revenue.

While the retail environment in China remains difficult, there are signs consumption overall has picked up in recent months. Retail sales growth surpassed expectations in May, with official data showing a 6.4% increase, the fastest growth since December 2023.

Analysts pointed to the earlier start of 618, with government consumer subsidies for goods such as home appliances and cellphones, as twin drivers.

Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, said the extended 618 festival front-loaded consumer demand, encouraging earlier spending and smoothing consumption trends into May.

“A longer 618 festival with low prices helps sustain engagement across weeks and has contributed materially to May's strong retail performance,” Cooke said.

Analysts warn a pause in subsidy programmes in several regions, as central government allocations dry up, could weigh on 618 sales and overall consumption this month, though more funds are likely to be allocated for those programmes in July.

“Rapid sales growth of key subsidy categories (such as home appliances) driven by the 618 shopping festival starting from May have quickly depleted funds,” HSBC analysts wrote in a note. “Suspension of national subsidies in selected regions may affect 618 sales and June retail sales,” the analysts added.

Eve Wang, 32, reflected on the shift in spending habits: “In the past, for example during events such as Singles' Day and 618, I used to spend a lot of money on stockpiling goods, but now I only buy what I need.”

Wang didn't participate in this year 618 shopping festival. “I didn't buy anything.”

Reuters