SHANGHAI — Singles’ Day, meet 6.18.
Twenty years ago, on June 18, 1998, Richard Liu opened a 40-square-foot retail unit in Beijing selling tech products. With the outbreak of SARS, Liu recognized that he needed to harness the power of the Internet to sell his products, and in 2004 he launched the online predecessor to JD.com. From those beginnings, JD has grown to become one of China’s largest online retailers and a member of the Global Fortune 500.
JD initially launched its 6.18 sales event to celebrate the company’s founding, but the day has quickly developed into the hottest midyear sales event for online and off-line retailers in China.
JD’s 6.18 promotional period runs from June 1 to June 20 on the JD.com platform and June 14 to 20 on Toplife, the e-tailer’s new premium brands platform. This year, transaction volume for the first 18 days of the anniversary sale was $24.7 billion, up from the $17.6 billion registered for the same period last year. During the period, 510,000 men’s belts were reportedly sold on the platform in the first 18 days, with Adidas registering a 200 percent increase in year-over-year sales, and Fila, as well as Under Armour, noting a 100 percent increase in sales for the same period last year.
E-commerce in China is an extremely consolidated marketplace, with Alibaba and JD taking the lion’s share of the market. This year, in order to differentiate itself from its main competitor during its anniversary sales period, JD made a push in technology capabilities, such as smart logistics and fully automated warehouses to maintain delivery efficiency, as well as implementing artificial reality shopping features. JD’s AR Styling Station, which allowed consumers to test the look of colored contact lenses on their faces before buying them, was used by 70 percent of consumers who purchased colored contact lenses during the sales period. Additionally, 52,000 boxes of Johnson & Johnson’s 1 Day Acuvue Moist lenses were sold in just one day during the sale, according to JD sales data. The company’s online partnership with Tencent, and therefore its WeChat and QQ platforms, and other content providers also helped to drive interest during the sales period this year.
JD also ventured into the off-line marketplace to boost sales during the shopping festival. The platform partnered with 1,400 brands on off-line pop-up stores ranging from food to technology and clothing, which resulted in 43 million visits to pop-up stores across 30 cities, according to JD data. About 320,000 new customers were acquired during five days of off-line cross-promotion with Aokang, Erke and Septwolves. Figures from a JD Fashion Space pop-up store in Beijing’s stylish Sanlitun area show that 28,000 people visited between June 8 and 10.
Historically, JD has focused on consumer electronics, with fashion only recently being added into the mix. “My sense is that fashion is less of a component of 6.18 sales than it is for 11.11, in part because early on JD tended to focus more on consumer electronics and so consumers see that as being the area where its strength lies. Looking at the sales that were ongoing this year, it did seem that the focus was more on things like smartphones and flat-screen TVs than on a wide range of fashion offerings. Having said that, I do think over the next few years we’ll see fashion becoming a more integral part of the event,” said Benjamin Cavender, principal at China Market Research Group.
This prediction will undoubtedly become true after the addition of Toplife, a stand-alone platform for premium luxury brands, to JD’s portfolio last October. The independent app works with brands directly in an online flagship format.
Toplife has 30 luxury brands on its platform, 19 of which are exclusive to the site in the Chinese e-commerce market. Xia Ding, president of international fashion at JD, would like to grow this number to around 100 brands by 2019, with not only fashion apparel being represented, but also luxury lifestyle brands and travel.
Although running sales promotions is counterintuitive to the luxury platform, it did participate in the 6.18 shopping festival this year, albeit for a slightly reduced time period. “[Toplife] is quite different from any other online players in the luxury space. They are more about discount, more about outlet items, more about cross-border format models. We are a separate, independent platform and only work with brands directly. The product assortment is in season, most are full price and we offer superior service to consumers, including white glove service, including 24/7 fashion consultant service. So that is really different to other players for the luxury space in China right now. I think it is probably quite different from all the e-commerce players in the luxury space in the rest of the world. Most are discount, most are outlet,” Xia said at a roundtable discussion.
Sales data for the anniversary shopping period on Toplife has not been released, but the platform’s brands did show interest, with Escada, Saint Laurent and Tod’s, among others, taking part. “We will ask the brands, ‘Do you want to participate in that and what kind of products do you want to select to participate?’ They might select a couple of items to be part of it. Very few brands say, ‘No, I don’t want to be a part of that.’ But now 6.18 is such a good season. It is about season end, so every brand has some inventory off-line they are discounting. It’s natural for them to be part of this and driving a lot of traffic,” Xia said.
Other e-commerce platforms, such as Alibaba’s Tmall, multibrand luxury platform Secoo, as well as off-line stores, have followed suit with their own 6.18 promotions, partly due to the convenient midyear, end of season timing and the Chinese marketplace being so hotly contested. Naturally, comparisons are drawn between JD’s shopping festival and its main competitor, Alibaba’s, more established 11.11 shopping festival, the world’s largest 24-hour online shopping event that reached sales of $25 billion in 2017 for the company. The 24-hour festival, also known as Singles’ Day, is similarly copied by other online and off-line retailers in China, including JD.
Analysts are on the fence about whether the 6.18 shopping festival will ever be able to rival the scale of Singles’ Day, and some believe that it might even dilute the impact of both sales periods. “The sense I get, speaking with consumers and with brands, is that 6.18 will never rival 11.11 in scale but that it is expected that something will exist. Alibaba joining the fray is a good way to make sure that JD can’t really stand out as offering something truly unique or different, so it makes sense for Alibaba to do something to steal away customers and I think we see the same thing happening for 11.11 with JD and others trying to also take part,” said Cavender.
“In the end, I’m not sure who really wins,” he added. “Brands don’t like it because they have to come up with new pricing strategies or new product that they can sell at discounted rates while protecting margins. The retailers don’t necessarily like it because they have to invest a lot to try and keep consumers on their platforms,” Cavender said.
Mark Tanner, founder and managing director of China Skinny, a marketing, research and online agency specializing in Chinese consumers, believes that it was natural for Alibaba to join the 6.18 shopping festival, even if it was initially established to celebrate the founding of its closest competitor.
“Alibaba likes to fill its calendar with festival promotions like every other platform, and given 6.18 has become quite a landmark festival due to JD’s investment over the years, it is wise to jump on board — much like many other platforms have jumped on its 11.11 Singles’ Day festival,” he said. “Obviously, there is an element of not wanting JD to have an edge with anything, either — most things each do seems to be tit for tat — particularly with their tie-up with Tencent, Walmart and now Google. If anyone can give Alibaba a run for their money, it is JD.”
This year, Alibaba’s Tmall extended its 6.18 sales to consumers in Hong Kong, Taiwan, Singapore and Australia. The company also concentrated on the seamless integration of the online to off-line shopping experience to drive sales. It implemented new technologies, such as facial scans, smart-fitting and smart fashion advisers at pop-up stores in more than 70 shopping malls and commercial districts across mainland China and Asia.
“New retail is another key element in this year’s promotion, combining online and off-line elements. Physical pop-up stores will be set up in overseas markets, and consumers visiting these can scan the product QR codes and place their orders online. Other attractive features include vouchers, red packets and free shipping,” Alvin Liu, general manager of Tmall Export and Import, said in a statement.
Tmall proved that it had clout during what is traditionally JD’s shopping festival, recording sales of 100,000 units of Yoseido face masks in the first minute of sales, with a total of 200 million units of face masks sold during the sales period from June 1 to 18. Additionally, 20 million men’s t-shirts were sold during the sales period and the sale of women’s jeans grew by more than 70 percent compared to the same period last year, according to figures provided by Alibaba. It was also noted that 140 million pairs of sunglasses were sold and Pandora’s sales figures increased 300 percent compared to the same period last year. Tmall Global reported that it maintained triple digit, high-speed growth both online and off-line during the 6.18 period.
The type of consumer groups that the rival e-commerce companies typically service could give some insight into the type of sales activity expected. “JD, I think, is known for having slightly better performance in terms of overall quality of service and for having a better range of consumer electronics available. Its customers tend to skew a bit more affluent and it does better in tier one and tier two markets, whereas Alibaba is seen as offering a wider range of product but having quality control and an overall shopping experience which might not be quite as good,” Cavender said.
However, JD has the logistics network to tap into these lower-tier cities and target the ever-increasing army of middle-class consumers in less urban regions of China.
“We see our shipments really going out to 56 cities. And that’s really impressive in a way. You know, for the luxury brands, one of the things that is really kind of challenging them from further growth is their penetration to the lower-tier cities. We know there are consumers there. There are a lot of wealthy people there, however, the brand does not have the capital or economies of scale to open up a store in the lower-tier cities. Basically, those lower-tier cities they cannot touch, but through e-commerce they can touch them. We can help them to reach 56 cities. And the average price is not lower than tier one or tier two. Those buyers, they really have strong purchasing powers,” said Xia.
The president of JD fashion also noted that she was considering opening new Toplife warehouses, which are temperature- and humidity-controlled to maintain the quality of the luxury products, in western China, where she is seeing a rise in demand.
JD leverages its superior logistics, thanks to its use of big data and automated warehouses allowing for over 90 percent of its orders to be delivered on the same or next day, and high-quality service standards such as Toplife’s white glove delivery service by highly trained delivery staff, to appeal to middle class consumers. JD also has the reputation of providing higher-quality goods, after Alibaba’s counterfeit scandals.
This year, 6.18 fell on the Dragon Boat Festival, a national holiday day in China, as well as on Father’s Day and the kick-off to the World Cup, which all could have helped boost sales and tied in with the marketing campaigns of different brands. However, Tanner believes that Chinese consumers might be becoming desensitized to the seemingly endless run of promotions in the market.
“The coinciding with national holidays certainly did [help], much as it did for 11.11 falling on a weekend in 2017,” he said. “It gives more people time to look for deals and shop. But overall, shopping festivals and promotions are becoming increasingly common, so they do bring less of a thrill. Anecdotally, deals weren’t as great this year; such as get 30 yuan off for a 199 yuan order.”
Whether it is to do with the lack of a nationally televised gala, longer sales period, or types of products and discounts available, it doesn’t seem that 6.18 holds quite the same place in Chinese consumers’ hearts, or more importantly their wallets, as 11.11 currently does.
“What you’ll see in most offices, including our own, is folk preparing and getting a little flustered prior to 11.11, but there certainly isn’t the same level of buzz about 6.18, particularly the accompanying gala. The discount level isn’t as appealing as 11.11, which claims to be up to 50 percent, although these types of promotions weren’t common based on last year’s experience. There are promotions happening all the time for different brands, so consumers don’t have to wait until that 6.18 to order so much,” Tanner said.