SHANGHAI — Based on this yr’s 618 online shopping festival results, Chinese consumers are starting to spend more cautiously, because the post-reopening consumption rebound began to lose steam.

In line with Syntun, a third-party data provider, total gross merchandise volume during 618 from major e-commerce platforms similar to Tmall, JD.com, Douyin and Pinduoduo reached 614.3 billion renminbi, or $85.8 billion, a rise of 5.4 percent year-over-year but logging the slowest growth rate since 2020.

Alibaba, Tmall’s parent company, selected to deal with empowering small merchants. The corporate said GMV for over 2.56 million small-to-medium-sized firms topped last yr’s 618, with 1.18 million breaking the ten,000 renminbi mark.

JD.com, which celebrated its twentieth anniversary on Sunday, also said the event “surpassed all growth expectations.”

Neither Alibaba nor JD.com released 618 GMV data this yr.

May data released last week also hinted at a slowdown in consumption growth. Retail sales within the period increased by 12.7 percent, slowing from April’s 18.4 percent, in keeping with China’s National Bureau of Statistics. 

Despite decelerated growth, 618, the second-largest shopping festival of the yr after November’s Singles’ Day, remained a crucial marketing moment for luxury and fashion players. 

“This yr’s 618 is considered essentially the most competitive because brands and platforms are desirous to seize the chance after China’s lockdown,” said Elena Gatti, managing director of Europe Azoya.

Berluti, Moncler, Lemaire, and Rick Owens took part in Tmall’s 618 festival for the primary time. As an alternative of slashing prices, most of those retailers focused on promoting their latest collections.

Luxury and fashion labels also took part within the site-wide coupon offer, which incorporates a 50 renminbi, or $7, discount for each 300 renminbi, or $42, spent. Discount rates remained in step with last yr’s promotional efforts.

In line with data from Tmall, through the first half-hour of the festival, which began May 31, sales at over 12 luxury brands, including Burberry, Chloe, Miu Miu, Maison Margiela, and De Beers, topped its first-day sales results during last yr’s 618.

At JD.com, transaction volume for Celine and Bulgari each saw a fivefold increase year-over-year for the primary 10 minutes of the “sales climax” on Saturday. 

With more brands similar to Apple, Pimples Studios, Michael Kors and Coach taking livestreaming in-house, retail analysts are upbeat on how brands can carve out a more sustainable online business in the long run. For instance, greater than 1.3 million people tuned in for Apple’s first Tmall livestream, which brought in an estimated 100 million renminbi, or $13.9 million, in sales.

“Brands could form of take that 30 or 40 percent commission that they were giving as much as the likes of Austin Li last yr, perhaps send 5 percent back to the consumers by way of a greater discount. They’re obviously also having a much higher margin,” observed Jacob Cooke, chief executive officer and founder at WPIC. 

‘”I believe brands are going to be more enthusiastic about Singles’ Day because they know they will actually earn cash,” added Cooke.

But for beauty and skincare brands, working with big names similar to Austin Li can still effectively move inventories. In line with data from Qingyan, through the 618 pre-sales period, which lasted from May 26 to May 31, GMV for beauty brands on Li’s platform increased 21.4 percent year-over-year to 4.9 billion renminbi, or $6.9 billion, which makes up around half of total beauty sales volume on Tmall. 

Reflecting Chinese consumers’ evolving preferences, Bernstein noted that mass-market domestic brands grew faster than global premium players. “The sales growth of domestic brands based in Shanghai was partly attributed to the low base from last yr’s pandemic-induced sales slump,” Bernstein’s report also identified.

Standouts included Proya Cosmetics, which saw its key brands Proya and Timage record 73 percent and 138 percent growth, respectively. Riding the wave of national pride and traditional Chinese aesthetics, smaller cosmetics brands similar to Maogeping and Florasis also logged notable growth during 618’s pre-sale period.

In line with Bernstein, festival execution, including personalized experience and differentiated product offerings, boosted sales for local players.

“In the present difficult macro environment, as Chinese consumers proceed to evolve, brands must prioritize product innovation, quality, and personalized services to stay competitive,” wrote Bernstein’s report, which brought up a case study where the cosmetics brand Timage offered an extra powder puff gift in a separate package to a returning customer.

Bernstein said that in comparison with 2022’s Singles’ Day, more foreign brands selected to keep up or reduce promotional levels. “Nevertheless, sales results usually are not necessarily tied to the promotional level,” wrote the report. “As an example, Clé de Peau Beauté had the identical promotional level yet achieved 77 percent year-over-year growth, while Bloomage‘s QuadHA offered higher promotions, yet sales declined 46 percent year-over-year.”