618 festival insights: Brand lessons on Tmall and JD.com

During this year’s 618 festival, China’s retail titans Tmall and JD.com each played to their strengths, reshaping the contours of the retail industry. They utilized advanced technology and strategic partnerships to maximize their impact on this pivotal annual sales event. Consumer behaviors and priorities have evolved, prompting brands to shift their strategies accordingly. Discounts are now available throughout the year due to the rise of livestreaming and the proliferation of secondary shopping festivals. “There’s diminished buzz around this year’s 618, but I think that’s more of a reflection of changes to the online shopping landscape rather than of consumer sentiment,” says Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies. “I think the festival reflects positively on sentiment.” New market dynamics and consumer preferences “There was high consumer confidence and a strong appetite for high-end goods. Brands offered exclusive discounts and limited-edition releases, driving significant traffic and sales,” says CEO and founder of market research firm China Trading Desk, Subramania Bhatt. While fashion, both fast and high-end, reported positive sales boosts this 618, Bhatt notes that eco-friendly products are also gaining traction among consumers, along with personalized and custom-made fashion items. Tmall and JD.com are navigating shifts in consumer preferences and economic conditions, making notable pivots during this shopping festival. Both are focusing on enhancing the consumer experience to entice sales during sluggish economic times. Tmall is capitalizing on a shift towards loyalty programs and high-end goods, enhancing its offerings with luxury items and personalized services to attract consumers. Meanwhile, JD.com is focusing on competitive pricing and rapid delivery, aligning with the practical demands of Chinese shoppers in a post-pandemic landscape where value and speed are paramount. With more Chinese consumers purchasing luxury goods online, Bhatt estimates that this year’s event will see 5% year-on-year growth, with China’s luxury e-commerce sales reaching $35.4 billion (257.4 billion RMB). Online sales now make up 42% of the market. And while Tmall continues to be the go-to platform, there is a noticeable consumer shift towards JD.com, Pinduoduo, and even social commerce app Xiaohongshu. Tmall: 88VIPs and the 10 billion club By the close of the event on June 18, 365 brands had surpassed $13.7 million (100 million RMB) in sales, with over 36,000 brands doubling their sales from the previous year. A significant contributor to this success was the surge in new 88VIP memberships, which saw a 65% increase year-on-year. Leading the sales pack were high-profile members of the “10 Billion Club,” including Apple, Midea, Haier, Xiaomi, Moutai, and Nike, each generating exceptional revenue. Tmall has solidified its leadership in luxury and beauty e-commerce. This year, it featured over 200 high-end brands, including prestigious names from the LVMH and Kering groups, alongside Chanel, Hermès, and Richemont. In a notable departure from tradition, Tmall abandoned pre-sales, opting to offer over 100,000 new and exclusive products directly to consumers. This approach not only streamlined the purchasing process but also enhanced the exclusivity and allure of the items available. The platform’s data-driven strategy paid off, with 43 beauty brands each surpassing 100 million RMB in sales, demonstrating the effectiveness of personalized recommendations. “Consumers are increasingly favoring domestic beauty brands, reflecting a trend towards guochao (national trend). There is also a strong demand for skincare products, driven by heightened awareness of self-care,” says Bhatt. “The whole beauty sector continued a robust performance with significant year-on-year growth. Sales were bolstered by targeted promotions, livestreaming events, and collaborations with key influencers and celebrities.” “Our assessment is that Tmall had a very strong festival, and GMV is up on that platform, suggesting that their recent user-first and content-focused strategy is paying dividends,” adds Cooke. “A range of sub-categories like cosmetics, appliances, and outdoor are seeing growth on Tmall, reflecting updated spending priorities from consumers.” Tmall Luxury Pavilion also bolstered its sustainability credentials by offering subsidies to customers trading in used luxury items. This initiative appeals to eco-conscious shoppers, promotes brand loyalty, and encourages higher spending. Strategically enhancing the customer experience, Tmall improved 88VIP member benefits by merging Taobao and Tmall discounts into one system. This year’s festival featured Tmall’s largest investment in consumer incentives yet, with $2 billion (15 billion RMB) in red envelopes and vouchers. JD.com: 500 million shoppers and surprising ‘hosts’ By the end of the event, JD.com’s 618 Shopping Festival reportedly reached record highs in both transaction volume and order count. Orders through JD Live saw a year-on-year increase of over 200%. Success is attributed to the platform’s commitment to an enhanced user experience, characterized by “more, faster, better, and cheaper,” alongside the participation of millions of brand merchants. Over 500 million users placed orders during the event. JD.com recorded substantial results, with 83 brands surpassing $137 million (1 billion RMB) in transactions and over 150,000 small and medium-sized enterprises reporting more than 50% sales growth. The festival witnessed a significant growth in new product offerings, especially in apparel, beauty, and sports goods, with a 380% year-on-year increase. Luxury brands such as Dior and Moncler experienced impressive year-on-year growth of 240%, while Coach saw its sales increase by over 100%. Specific segments like sun-protective clothing, hiking shoes, outerwear, road bikes, and electric skateboards more than doubled in sales. Additionally, jewelry and luxury items like baby gold jewelry showed strong performance. Emerging crossover backpack brands such as Deli and Aigole achieved growth rates over fivefold. JD.com also honed in on electronics and home appliances — a strong suit for the platform. Transactions doubled year-on-year for over 700 brands in these categories during the 618 festival. Central to JD.com’s strategy was the “Big Orders” initiative, which aims to secure transactions worth $4 billion (30 billion RMB) and achieve an annual sales volume of more than 20 million units. In an innovative move, top executives from major firms like Procter & Gamble, SK-II, and Haier participated in JD’s live broadcasts, attracting shoppers with incentives like “red envelope rains.” Moreover, JD Cloud’s use of Yanxi, a digital human avatar, in over 5,000 live brand rooms led to over 400,000 hours of livestreaming and over 100 million views. JD.com’s strategy for this festival included heavy subsidies, direct sourcing of competitively priced goods, AI-driven product introductions, trade-in guarantees, and enhanced logistics and customer service, all contributing to the success of the shopping extravaganza.

618 festival insights: Brand lessons on Tmall and JD.com

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Published June 21, 2024

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618 festival insights: Brand lessons on Tmall and JD.com