Tame Consumer Spending Weighs on Small Vendors During China’s ‘618’ Internet Shopping Festival
Chen Yangyuan
DATE:  Jun 12 2023
/ SOURCE:  Yicai
Tame Consumer Spending Weighs on Small Vendors During China’s ‘618’ Internet Shopping Festival Tame Consumer Spending Weighs on Small Vendors During China’s ‘618’ Internet Shopping Festival

(Yicai Global) June 12 -- Small and mid-sized sellers on major Chinese e-commerce platforms are disappointed about this year's ‘618’ online shopping festival because sales are not as good as expected despite their considerable efforts.

The operator of an online store on Alibaba’s Taobao for the past eight years told Yicai Global that he hires occasional workers to prepare for shopping festivals amid strong sales. But this year, he said he did not need to because sales have not reached even half of last year's 618.

The shopping festival around June 18, or 618, is among the biggest in China every year. It was first started in 2010 by Beijing-based e-commerce giant JD.Com.

The main reason for sluggish sales during this year's 618 is that consumer demand has not yet fully recovered, Li Chengdong, founder of e-commerce think tank Dolphin, told Yicai Global. More time is needed for consumer confidence to recover because of uncertainty around wages, Li added.

“There is almost no difference in sales between mine and other similar stores,” the Taobao merchant noted. “But I heard two leading sellers managed to double sales as they sold products at lower prices,” he said, adding that smaller vendors are being squeezed by low-price competition. 

According to another small merchant selling tableware on Taobao, products are much cheaper than usual during 618, but sales have failed to grow since the end of May on a year earlier despite a slight increase from a month earlier. 

Taobao, JD.Com, and Pinduoduo have been encouraging sellers to attract buyers with low prices during this year’s 618. But not all can follow that advice.

Joining promotional events organized by the platforms means I need to sell products at discounted prices of 20 percent to 30 percent,” a small vendor on Pinduoduo told Yicai Global. “If I do that, I’ll be in the red.”

The store's profit margin is already narrow, she said, adding that even if she lowered prices, she could not compete with the manufacturer's self-operated stores. 

Seizing growth opportunities for specific products is crucial for e-commerce sellers, Dolphin’s Li pointed out. A small vendor of pet toys on Taobao said his store’s sales rose over 618 from a year earlier, probably because of the addition of popular goods in the discount section.

But once sales of a product jump, competitors notice and it will gradually be available everywhere,” the person added. So the smaller merchant needs to creatively explore new demand and find new items, he added, noting that the profitable period will not last long.

Editors: Tang Shihua, Futura Costaglione

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Keywords:   Pricing War,E-Commerce Platform,Small Retailer,618 Shopping Festival