JD.com has become the latest Chinese tech giant to announced plans for a ChatGPT-style product, joining the hype around the chatbot technology.
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Chinese consumers snapped up billions worth of items in China’s first major online shopping festival after emerging from the pandemic as merchants slashed prices, but analysts say that consumer confidence still remains weak.
Chinese merchants offered customers steep discounts during the 618 shopping festival, which ran on China’s major shopping platforms from the end of May until June 18, in the hopes of shoring up sales amid a weaker-than-expected recovery in consumption.
Major shopping festivals, like e-commerce retailer JD.com’s 618 and Alibaba’s Singles’ Day, are typically barometers of consumption in China, and Chinese e-commerce platforms often participate by offering discounts and incentives to consumers.
Analysts say that consumption remains soft this year as China emerges from the pandemic, even as platforms including JD.com, Tmall, Taobao and Pinduoduo offered billions in subsidies.
“Chinese consumer confidence remains weak due to a mix of geopolitics, continued weakness from Covid-19 and domestic Chinese politics,” said Shaun Rein, founder and managing director of the China Market Research Group in Shanghai.
Rein said that consumers were less likely to spend more during 618 as merchants had already been discounting heavily for years because of the pandemic, and deals were not that much better compared to previous months.
In March, JD.com launched a “10 billion yuan subsidies” program to compete with rival Pinduoduo, which is known for its low-priced goods. The CEO of Alibaba’s e-commerce business unit, Trudy Dai, also previously pledged to make “huge, historic” investments to attract users to its platforms.
“For months, Chinese consumers have been price-conscious, looking for deals and trading down across most product categories,” Rein said.
This year, for the first time, JD.com did not reveal its total sales numbers for the 618 event, despite saying in a blog post that the 2023 shopping extravaganza had “exceeded expectations, setting a new record.”
Last year, neither Alibaba nor JD.com unveiled final numbers for Singles’ Day in November, amid muted festivities during Covid-19 and an expected slowdown in growth.
JD.com said in a blog post that during the 618 shopping festival, consumers snapped up 10 times the number of products that were eligible under its “10 billion yuan subsidies” program, compared to March.
Despite overall soft consumption, categories like cosmetics and luxury goods saw a bigger uptick in sales compared to the previous quarter, according to Jacob Cooke, CEO of e-commerce consultancy WPIC.
For this year’s 618 event, more luxury brands took part as they sought to boost sales in China after the sector in 2022 declined for the first time in five years amid China’s strict “zero-Covid” policies and lockdowns that hammered retail spending.
Brands like Moncler and Lemaire took part in 618 on Tmall for the first time.
Many luxury brands also took the opportunity to launch new products online, with some offering rare discounts and other incentives such as interest-free payments in installments over 12 months.
Brands like Burberry, Chloe and Miu Miu’s sales in the first 30 minutes of the 618 festival at the end of May had exceeded its total sales during the shopping festival a year ago, according to Tmall data.
“Luxury coming back online is a big trend, because that’s the category that’s been hit really hard over Covid-19,” said Cooke. “Some brands may see up to a 10-fold increase in sales over last year.”
