Following the kickoff of the mid-year 18-day sales event, China’s e-commerce giants were in the green in capital markets Tuesday.
While some people following Chinese retail industry stocks have probably heard of the Double 11 sales event, also called “Singles’ Day,” which occurs annually on November 11, another major shopping event is less known in the United States. The mid-year promotions-driven shopping craze is called “618” and takes place from June 1 to June 20.
This year, the festival, which has just kicked off, is especially significant as it follows mass closures of businesses throughout China during the Covid-19 outbreak in the first quarter. Just last week, Beijing said that more than 600 million people in China earn less than 1,000 yuan ($140) per month, and their livelihood was weakened by the epidemic. The results of the 618–2020 event will show just how much the country’s consumers are willing to spend after the lockdown has kept most from work.
Today, the industry giants released the results of Day One of the spree and enjoyed a nice boost in trading.
Alibaba Group (NYSE: BABA; HKEX: 9988) was trading 3% higher in the afternoon, at $213.04 per American depositary share. The company said on its official medium, Alizila.com, that the first 10 hours of the campaign showed a 50% jump in gross merchandise volume from a year ago. The operator of Tmall and Taobao, it is offering coupons on top of coupons for its consumers.
“This year would also feature the biggest giveaway of consumer coupons and subsidies in the event’s history, totaling over RMB14 billion ($1.96 billion) in value,” Alizila reported.
Smaller rival JD.com Inc. (Nasdaq: JD) also announced a series of accomplishments on Tuesday, which sent its stock to $56.17 per ADS in early trading – very near its 52-week high. JD shares, however, slid lower in the afternoon, trading just 1% above yesterday’s close.
Both JD and Alibaba noted growth in luxury retail. Alibaba said it had a record number of participating brands, including Cartier, Chanel, Burberry, Balenciaga and Montblanc. JD said on its corporate blog today that sales of luxury products soared 400% year-over-year, noting brands like Delvaux Tempete, Ferragamo, Hugo Boss, and miumiu.
JD, which celebrated its 17th anniversary on June 1, also noted a phenomenon it called “revenge consumption” – the rebound of sales for products that slowed during and after the Covid-19 lockdown period. The giant said it saw doubled transaction volume for large household appliances in certain provinces, including Hubei province, where the coronavirus had originated. The company also reported a rise in health service sales, the demand for customized products, and the sales of 5G mobile phones.
Alibaba, among new techy perks, boasted that its livestreaming platform Taobao Live will feature more than 600 brand executives and 300 celebrities during the course of the festival. It said in the first 90 minutes into 618, the GMV from livestreaming sales had exceeded 2 billion yuan. On its side, JD has reportedly teamed up with Tencent’s Kuaishou on e-commerce livestreaming, according to Pandaily.
Offline stores of both giants are also in on the action.
General manager of Tmall and Taobao marketing and operations, Liu Bo, said, as cited by Alizila, “We want to go all-in to help sales rebound and merchants recover.”
Other players in China’s e-commerce are Pinduoduo (Nasdaq: PDD) and Suning.com, which also provided extra post-coronavirus promotions, as CGTN reported on Monday. PDD was trading up 3% on Tuesday afternoon, at $67.57 per share.