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Fierce price competition among e-commerce platforms on Singles Day shopping event

With the Chinese economy still struggling to recover, expectations for sales growth for the Singles Day or Double 11 festival, the world’s biggest e-commerce shopping event, were subdued this year. The event is regarded as a gauge of consumer confidence. 


Originally a 24-hour online shopping event held on Nov. 11 each year in China, the Singles Day festival - a nod to the digits in the date - has expanded into weeks of promotions across the country's major e-commerce platforms and in bricks-and-mortar stores. 


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A slowing economy and softening of consumer demand, have pushed China’s e-commerce and social commerce platforms to compete more fiercely for the purchases of Chinese consumers.  However, local customers are being more cautious and discerning, choosing rational spending instead. Activities and products leading to personal fulfillment seem to be attracting more Chinese consumers, instead of heavily discounted products.  


Singles Day 2023 


China's largest e-commerce player Alibaba Group said it recorded year-on-year growth over this year's Singles Day sales period, while rival JD.com reported sales volumes at a record high. 


Alibaba put pressure on merchants to price aggressively this Singles Day, and at the start of the festival in late October, said it would offer 80 million products at their deepest discount of the year. 


Analysts saw this as an attempt to fight back against rivals such as Douyin and PDD Holdings' Pinduoduo, which have changed the landscape of Chinese e-commerce by selling lower-cost and discounted items year-round. 


As a result, the consumer sector engaged in fierce competition, with price matching strategies and lowest guarantees. Discounts of 40%-50% were much more common than in previous years.  


JD.com’s theme for Singles’ Day 2023, “Real Cheap”, underscores the commitment to value for money, especially in the realm of domestic products.  


In 2023, Singles’ Day has been divided into two or three phases by major platforms such as Tmall and JD.com.  


The first phase of pre-sales started in late October and finished on November 3, during which time consumers placed orders and paid a deposit to lock in their purchases.  


According to statistics, from October 31 to November 1, total sales reached RMB 196.3 billion (US$ 27.6 billion). Tmall took 59% of the sales and JD.com 32%, with other platforms (e.g., Douyin, Pinduoduo) making 9% in total.  


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Many consumers complained that there were no ‘real cheap’ products or meaningful discounts that benefited them, and they were sometimes confused or exhausted by the complicated rules across various platforms.   


This year’s festival also marked an important shift towards conscious consumer behavior, with a focus on domestic products and brands with a purposeful mission.  


On the other hand, influencer-driven purchases went down, with livestreams now influencing only 22% of consumers, from 32% in 2021. 


A growing number of Chinese consumers are showing preference towards domestic brands, with 66% expressing interest in local products. This move represents increased confidence in the safety and quality of these products from the younger generations.  


GMV Figures 


Data provider Syntun, estimated cumulative gross merchandising volume (GMV) sales across major e-commerce platforms rose 2.08% to RMB 1.14 trillion (US$156.40 billion) compared with growth of 2.9% last year. 


In 2023, when China was emerging from COVID-19 curbs, Alibaba did not disclose the yuan value of its sales for the festival for the first time. Again this year, it said only that sales were positive, without giving details, for its e-commerce platforms Tmall and Taobao. 


The GMV figures take into account the value of all orders placed, and do not capture the amount that will be returned later. 


Analysts and industry executives expect return rates to be high this year as consumers buy more to obtain larger discounts on checkout, only to return the items they do not need. 


Consumers on social media are openly discussing what products to buy to meet the conditions and even returning products they don’t need after the shopping festival is over, including medium to high priced products. It is recommended that brands consider the post-festival return rate when evaluating their Singles’ Day performance.   


Consumer Preferences 


Items related to health and wellness and outdoor lifestyles were expected to outperform, with global brands such as Nike and Lululemon selling well. 


Alibaba reported that sales of road bikes jumped by 300% during the first hour of sales. 

Color cosmetics, traditionally a strong performer throughout the Singles Day sales period, were expected to struggle this year as make-up demand remains low almost a year after China lifted strict COVID-19 restrictions.  


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The market demand for male products also increased by November 10, overtaking pet products on the top sales lists for the first time. Electronic devices and outdoor activity equipment are the most sought-after among this group of consumers.   


This year, consumers were not driven only by low prices and coupons compared to previous editions. With the prevailing trend for so-called ‘quiet luxury’ lifestyle livestreaming on social commerce platforms such as Xiaohongshu, consumers showed interest in brands that offer personalization and a mission.  


User engagement also reached a record high, with Tmall’s event attracting over 800 million cumulative visitors. Lower-tier cities helped to boost sales, adding over 20 million new buyers and 140 million additional orders – these cities will have a big role to play for premium and luxury brands in the future. 


 

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