China's annual Singles' Day shopping festival, known as the largest e-commerce event in the world, has once again seen impressive sales figures this year. Basic trends for investors reveal opportunities, but also potential challenges. Although e-commerce giants such as Alibaba, JD.com and Xiaomi have shown robust numbers, selective data disclosures and emerging changes in consumer behavior add complexity in assessing the true level of consumption in the Chinese economy.
Are the numbers really robust?
Alibaba, JD.com and Xiaomi unveiled impressive numbers, with Alibaba seeing a 50% increase in its paid 88 VIP members who shop, JD seeing a 20% increase in its customer base, and Xiaomi achieving record sales of 31.9 billion yuan ($4.4 billion) during this four-week promotional period. Independent data from market-tracking firm Syntun estimates that total cross-platform transactions leading up to Singles Day reached 1.44 trillion yuan, up 27% year-on-year.
Despite these strong numbers, neither Alibaba nor JD have released their Gross Goods Value (GMV) – a critical indicator of total transaction volume – this year, raising questions about overall growth momentum and leaving analysts without a complete overview of consumer spending.
Changes in consumer behaviour
This year's Singles' Day saw an extended promotional period, with sales events stretching to a record 29 days compared to 19 days last year. This expansion in promotions reflects a broader trend in the Chinese e-commerce landscape. Discounts and offers are now offered more consistently throughout the year. Sharon Gai, an industry consultant and author of Ecommerce Reimagined, notes that such practices contribute to "discount fatigue" among consumers, causing large sales events like Singles' Day to have less of an impact on annual sales.
Economic upstream and yield growth
China's economic challenges, including the troubled real estate sector and broader global economic uncertainty, are also affecting consumer sentiment. Jeffrey Towson, a partner at TechMoat Consulting, suggests that Chinese consumers may adopt a more cautious approach to spending and focus on basic or strategic purchases. Anecdotal reports show rising revenues as consumers place large orders to maximize discounts but then return items. This trend was experienced last year, for example, by luxury retailers such as Net-A-Porter.
Live streaming and AI-powered products
Contrary to broader moderate spending trends, the e-commerce live streaming segment continues to grow, with transactions up 55% year-over-year. This increase suggests that while traditional stores are facing challenges, newer shopping formats continue to resonate with consumers, driven by interactive and engaging shopping experiences.
In addition, technology-focused product segments have shown resilience. JD.com highlighted a significant increase in sales of AI-powered electronics, with orders for products such as smart glasses tripling and other devices such as phones and computers doubling. Alibaba also said that AI improvements have helped merchants reduce marketing costs, highlighting the role of technology in helping retailers optimize operations in a more competitive environment.
Information for investors
For investors, Singles' Day 2024 offers a mixed outlook. On the one hand, Chinese e-commerce giants are still showing growth in both sales and customer engagement, with innovative segments such as live streaming and AI-powered electronics showing potential. This suggests that consumer interest in certain e-commerce formats and technologically enhanced products remains strong. However, the shift towards cautious and strategic consumption suggests that consumer confidence is not as strong as in previous years.
https://finance.yahoo.com/news/alibaba-jd-tout-singles-day-071314080.html
