‘618’ Netted £110 Billion in Sales. Did you miss out?

4 minute read

By Adam Sandzer, Hot Pot Strategy Director

618 is China’s mid-year shopping festival. Although less well known than Singles Day (11.11), 618 is gaining popularity. This annual shopping festival starts on June 1st and ends on June 18th (hence the name 618).

This year, the two Chinese giants – Alibaba, including Taobao and Tmall, and JD.com reported unprecedented sales of £110 billion ($137 billion) during 618. Alibaba led the way with £79.41 billion in gross merchandise value, and JD.com reported £30.62 billion in total transaction volume, up 33.6% vs 2019.

Did your brand miss out on the opportunity?

The short answer is, it depends on your category, as it so often does in China.

Top categories included beauty products, fresh food, medical and health care products, kitchenware, mobile phones, home appliances, food & beverages, baby & maternal products, and home appliances. For brand owners in these categories, this is a must-win moment.

However, luxury and fashion brands were less active during the festival, focused on other events in the China marketing calendar.

Luxury brands are increasingly launching official presences on China marketplaces such as Tmall and JD.com. However, we see a high degree of caution and scepticism amongst luxury brand executives who have concerns around presentation and discounting and the negative impact on equity and value.

Naturally, the platforms themselves, desperate to elevate their own image and increase the average transaction value, have been pulling out all the stops to make it difficult to say no. We know that Tmall have doubled down on Luxury Pavilion with the launch of Luxury Soho, while JD.com have partnered with Farfetch and very clearly articulated their luxury focus. In place of discounts and coupons, the platforms have built a proposition around exclusive product availability, celebrity activations and gifts with purchase.

However, the Covid-19 pandemic has abruptly paused brands selling to Chinese consumers travelling internationally and also limited domestic offline consumption. In this context, coupled with escalating global stock issues, participation in previously taboo events, like 618, has become much more acceptable and even attractive. It will be the same when Double 11 comes around later in the year.

The big question is then, how will luxury brands approach these traditionally promotion-driven events?

While luxury brands resisted these promotions as recently as Double 11 in 2019, this year’s 618 mid-year promotion has seen modest discounting on brand owned stores. It is reported that 178 luxury brands joined the promotion on Tmall Luxury Pavilion, including the likes of Ermenegildo Zegna, Cartier, Chanel, Prada, Alexander McQueen and Balenciaga. Some are offering deals or special prices, although it must be noted that the fabled slash lines are not universal. The discounts available on Farfetch are much more prominent and aggressive.

Given the current retail climate, platforms have been driving these festivals more than brands themselves. For brands, participating and discounting are more pragmatic and tactical plays than long-term strategy.

Indeed, the buzz from official channels outside the marketplaces such as WeChat, Weibo and Little Red Book is barely audible amidst the noise generated by the much more active and digitally savvy fast fashion, beauty and electronics brands.

In summary, 618 has not yet been afforded top tier campaign status by luxury brands. This is particularly clear when compared to recent 520 activations, where we saw brands such as Gucci put significant investment into creative content and celebrity endorsements. Many luxury clients are more focused on the aesthetically appealing Qixi (Chinese Valentine’s Day, August 25th) and have been for some time.

In a world where commerce and content are increasingly blurred and retail sales are increasingly shifting online, is there much difference between leveraging a high-volume marketplace platform to clear excess stock, in comparison with an offline outlet mall?

As 618 results pour in, luxury executives should consider this paradigm shift as they start to think about Double 11 and the broader role of China’s marketplace platforms.

Looking to understand which events in the China marketing calendar are must-wins for your brand?

Contact Hot Pot China to discuss how our team of China specialists can help realise greater value in your brand, digital and eCommerce initiatives.