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Singles Day reaches fever pitch today and market watchers are busy crunching the numbers on China’s biggest shopping festival.
Also known as Double Eleven, this year’s edition is bigger than ever in terms of duration and discounts, but not without its challenges.
There are more promotions, while discounts are also bigger, thanks to government subsidies for those who trade-in on old home appliances and consumer electronics for new ones.
Online retail rivals Alibaba (9988), JD.com (9618) and Pinduoduo all kicked off presales a week earlier than last year while Douyin – China’s TikTok but a growing force in e-commerce – launched presales as early as October 8 in the battle for buyers in the mainland.
But shoppers are thrifty amid the economic downturn, and complicated deals are confusing and putting some of them off.
And with online sales now running practically every day of the year amid the raging retail war, they no longer have to wait for a festival to get the best deal possible or to indulge in some comfort shopping.
While there’s no telling whether China’s stimulus blitz will trigger any meaningful consumer rebound, some analysts fear that the huge discounts offered could pull forward demand from future quarters.
Against this backdrop, and with official sales ending today, Singles Day is expected to record modest growth.
Massive but complicated deals
Earlier this year, China unveiled a nationwide initiative to boost consumption and support trade-ins for energy-efficient appliances, with additional policy support in July through a 300 billion yuan (HK$324.8 billion) injection via ultra-long special treasury bonds.
The initiative raised subsidies for car trade-ins, and details for home appliances and consumer electronics unveiled in August, included discounts of up to 20 percent – and a maximum of 2,000 yuan – on energy-efficient appliances such as refrigerators, washing machines and computers.
This, coupled with online discounts, gives shoppers reductions exceeding 40 percent during the Singles Day festival – and it’s not taken them long to figure this out.
”Who hasn’t done the painting yet but already has home appliances at home? It’s me,” a shopper said in remarks posted online.
But there’s been complaints that some items are even pricier compared to the mid-year “618” sale – the country’s second-largest shopping festival – as merchants reduce their own promotions in light of the government subsidies.
Some merchants have been criticized for hiking prices, with customers discovering that after using subsidies and discounts, they received only standard or even higher prices.
”They might as well just give the money directly to merchants,” another shopper complained.
Due to varying government subsidies across provinces and cities that cover different types of products, some coupons have restrictions on eligiblility or the delivery locations.
Add this to the already complex platform discounts, and bargain hunting is now more challenging than ever.
Despite these hiccups, early indicators suggest that the subsidies have boosted sales.
Alibaba reported a 765 percent surge in home appliance presales in the first hour on October 14 compared to the same time last year while JD.com also noted double-digit growth in transaction volume, orders and users from October 14 to October 31, achieving record sales in consumer electronics and home appliances.
Quieter sentiment overall
Overall, sentiment this year appears quieter.
Unlike past events featuring celebrity-studded galas with stars like Taylor Swift, Alibaba skipped the show this year reportedly to save costs and offer more subsidies to merchants and consumers instead.
Since 2022, major platforms have also stopped reporting figures for gross merchandise value – a measure of sales over a certain period – which once used to break records.
Research firm Syntun reports that major e-commerce platforms saw GMV reach 845 billion yuan as of October 30, though comparisons are difficult given the extended promotional period this year.
Around 80 percent of GMV came from Alibaba, JD.com, and PDD, with the remaining 20 percent generated by live-streaming platforms Kuaishou and Douyin.
In terms of categories, household appliances topped the list with sales of 132.4 billion yuan, accounting for 15.7 percent of total sales, Syntun said.
The trade-in programs helped contribute to 4.6 percent of China’s economic growth in the third quarter though the growth was still the weakest since early last year. And while the program offers a temporary boost, it may front-load spending, leaving limited momentum for next year.
And Goldman Sachs estimates if Donald Trump, the once and now future US president, follows through his high tariff plan, China will be forced to pivot more to bolster domestic demand, including expanding the household goods and equipment replacement programs and providing targeted cash handouts to some households.
China has recognized declining domestic demand as a key challenge since 2021 and has pledged to boost consumption.
While many economists have suggested cash handouts to stimulate spending, Beijing has yet to adopt this approach.
Going overseas
Shopping platforms are also seeking growth beyond the mainland.
In Hong Kong, Taobao Hong Kong’s 1 billion yuan push includes free shipping till the end of the year, JD.com is investing 1.5 billion yuan to boost services and PDD has teamed up with SF Express to provide free shipping.
Early data from October shows a doubling of new users on Taobao Hong Kong, with daily GMV up six-fold.
JD.com reported a fourfold increase in sales in Hong Kong and Macau during the first four hours of the sale.
Meanwhile, Singles Day makes its debut in the US today, under Alibaba’s AliExpress, offering discounts of up to 90 percent till November 18 in a challenge to Black Friday and Cyber Monday sales.
Alibaba has also launched the TAO cross-border app in Japan.
Meanwhile, JD.com’s international division has expanded into Malaysia and Thailand, with free shipping options during Singles Day.
Citigroup analysts’ top picks for e-commerce platforms in the near term are JD.com, thanks to its stronger partnerships with local governments and its various mix of discounts under the trade-in program. This was followed by Alibaba, according to Citi, which added that PDD has higher risks.
Singles Day no longer feels the love it once had, when sales grew at a compound annual growth rate of 35 percent between 2014 and 2019, as statistics from Bain and Company show.
Analysts at UOB Kay Hian told CNBC they are predicting modest GMV growth of 5 percent this year, while WPIC Marketing + Technologies co-founder Jacob Cooke told the news network he expects growth of around 15 percent.
Importantly, Huatai Securities (6886) believes Singles Day will be key to finding out whether the online retailers have finally called a truce on their bitter price battle.