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Chinese consumers on the hunt for low prices, local brands on Singles’ Day shopping festival as economy shows signs of turning a corner

China’s e-commerce giants are counting on bargain-basement prices in their Singles’ Day campaigns to attract more value-conscious consumers
Online shopping platforms under Alibaba’s Taobao and Tmall Group remain the top marketplaces for consumers on Singles’ Day this year, a survey said

Singles' Day (11.11)

Ann Caoin ShanghaiandIris Dengin Shenzhen

Published: 12:00pm, 11 Nov 2023

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In recent years, 48-year-old government employee Shen Ling, from eastern Jiangsu province, has been no different to most of mainland China’s roughly 900-million-strong online contingent of consumers who looked forward to hefty discounts on Singles’ Day, the world’s largest shopping festival.

Shen typically spent tens of thousands of yuan on promotions during this retail extravaganza, thanks to her “iron rice bowl” – referring to an occupation with guaranteed security in Chinese. Shen’s circumstances, however, have changed after her annual salary was cut by about a quarter since 2021, as local governments across the country grappled with a debt crisis amid rising spending and a slump in land sales and tax revenue.

“I’m controlling the purchase of expensive or big-ticket items as much as possible this year,” she said. “For example, I don’t want to upgrade my Huawei smartphone. I’ve also changed my cosmetic products from Estee Lauder to domestic brands.”

Those conservative choices reflect the mood of Chinese consumers in this year’s Singles’ Day festival, as they continue to tighten their purse strings in spite of signs that the country’s economic recovery has regained momentum and Beijing’s forecast of “around 5 per cent growth” this year.

A woman stands near an Alibaba Group Holding advertisement promoting this year’s Singles’ Day shopping festival at a bus stop in Beijing on October 26, 2023. Photo: Reuters

China’s economy rose by 1.3 per cent in the third quarter from the previous three months, and by 4.9 per cent year on year, with officials suggesting that 4.4 per cent year-on-year growth this fourth quarter will be enough to achieve the nation’s full-year target.

Still, the world’s second-largest economy has yet to secure a solid rebound amid an ailing property sector and weak domestic consumption.

China’s consumer price index fell by 0.2 per cent in October from a year earlier, compared with a flat reading in September, in the latest sign of the country’s unstable recovery and anaemic domestic demand.

More than three-quarters of 3,000 shoppers recently surveyed by Bain & Co plan to spend less or maintain their expenditure at 2022 levels during this year’s Singles’ Day, according to the US consultancy’s report published on Tuesday.

03:19

Singles’ Day: world’s biggest online shopping event under way amid slowdown in Chinese economy

“The Chinese macroeconomic headwinds that are making consumers more value-conscious have been well publicised,” the report said. These include “a slowdown in the country’s previously strong GDP growth, relative weakness in consumer confidence and concerns over the property market”.

That situation has led China’s e-commerce giants to count on bargain-basement prices in their Singles’ Day campaigns to woo consumers who are reluctant to spend in this uncertain economy.

“The [online shopping] platforms are trying to differentiate themselves to fight for consumers, as they see the growth of [China’s] e-commerce population gradually slowing down at the current high penetration rate,” said Kenny Yao, Shanghai-based director of global consultancy AlixPartners. “If they can’t provide consumers with a differentiated experience, the easiest way to attract them is to lower prices.”

Alibaba Group Holding’s core mainland retail platforms, under its Taobao and Tmall Group, remain the top online marketplaces for Chinese consumers on Singles’ Day this year, according to a recent report by AlixPartners. Of 2,150 local shoppers that the US consulting firm surveyed, 92 per cent said they intend to make purchases from Taobao or Tmall during the shopping festival.

JD.com came in second in the survey, followed by ByteDance-owned Douyin and PDD’s Pinduoduo.

In light of increased competition and a sputtering economy, China’s e-commerce industry does not expect to post another record turnover during this year’s Singles’ Day – also known as “11.11”, referring to the traditional 24-hour shopping extravaganza on November 11.

Both JD.com and Hangzhou-based Alibaba, owner of the South China Morning Post, for the first time last year withheld announcements of their gross merchandise volume, or final sales tally, from the annual online and offline shopping festival, which took place just as China began to lift strict pandemic control measures.

Although e-commerce remains the core revenue stream for Alibaba, new group chief executive Eddie Wu Yongming outlined in an internal letter in September that the company is sharpening its focus on artificial intelligence (AI) and enterprise users.

“Over the past two decades, China’s digital transformation mainly took place in the consumer internet,” Wu said on Wednesday at the World Internet Conference in Wuzhen, in eastern Zhejiang province. “As AI continues to unleash new productivity, it is key for China to seek new breakthroughs in the digital economy.”

Alibaba, JD.com roll out low-price strategies for Singles’ Day amid tight economy

Alibaba’s Singles’ Day campaign this year has been bolstered by a group of live streamers, including top influencer Austin Li Jiaqi, persuading consumers to buy from the group’s platforms.

“This year’s Double 11 is very different from the previous year as it marks an important defensive war by the traditional e-commerce sites against live-streaming platforms,” said Zhang Yi, founder and chief analyst at market consultancy iiMedia. “Live-streaming e-commerce has grown so rapidly thanks to the low prices it offers, as well as the low cost of attracting customers through short videos.”

Alibaba’s Taobao and Tmall Group said they are focusing on “serving Chinese consumers looking for value-for-money products by offering the best deals”, as its platforms feature more than 80 million products at their lowest prices this year.

Beijing-based rival JD.com, meanwhile, has offered a 10 billion yuan (US$1.4 billion) subsidy campaign since March, touted as “its largest sales promotion event in history”.

The firm is also offering 30-day, best-price guarantee for more than 800 million products. If shoppers find more affordable goods elsewhere for items they bought on JD.com during its promotion, the e-commerce firm will compensate them for the price difference.

Workers prepare packages for delivery ahead of the Singles’ Day shopping festival at a logistics centre in Nanjing, in eastern Jiangsu province, on November 10, 2023. Photo: Agence France-Presse

While it remains to be seen what the Chinese e-commerce players’ final sales tally will be this year, these platforms are expected to keep mum on those figures, just as they did last year, amid consumers’ lethargic attitude to spending big this Singles’ Day.

“I have no interest to buy items other than daily necessities, no matter how hard the platforms promote their discounts,” said 26-year-old Emily Zhao, an employee at an internet company in Shanghai.

A long-time video gamer, Zhao said she spent nearly 6,000 yuan to buy a handheld game console in last year’s Singles’ Day, but has lost the passion to buy new gadgets this year.

She indicated that there is a “consumption downgrading” trend this year, based on the fewer people seen at shopping centres in Shanghai. Also, a large number of internet companies, including the one she works for, started laying off people last year.

A worker transfers packages for delivery ahead of the Singles’ Day shopping festival at a logistics centre in Nanjing, in eastern Jiangsu province on November 10, 2023. Photo: Agence France-Presse

Another online consumer that has put a lid on spending for this year’s Singles’ Day is Shenzhen resident Capy Ding, who used to stock up on contact lenses and various skincare products during past festivals.

“In previous years, I usually spent around 2,000 yuan to buy enough contact lenses for a whole year, but this time I can only stock up for half a year with the same amount of money,” Ding said. “That means prices have doubled. I have definitely tightened my belt this year.”

Pinduoduo, meanwhile, has said that its users’ buying behaviour appears to be more “rational”. It indicated that shoppers are buying only what they need, rather than spending blindly on aspirational items.

Mothers and the younger generation born after 2000 in third- and fourth-tier cities have favoured local brands, buying local beauty products, home appliances and sports products from big-name domestic labels, Pinduoduo said in late October. White-collar workers and middle-class consumers in first tier cities are buying more day-to-day goods such as fruit and cat food, as well as digital products.

Pinduoduo sees sales jump during Singles’ Day promotion

The rise of domestic brands, which have lower prices and are marketed aggressively to local consumers, has also increasingly threatened the market share of foreign brands.

“Many foreign brands created a higher-end image in the past, which seemed to be naturally attractive to Chinese consumers, AlixPartners’ Yao said. “But this approach may become more difficult in the future.”

Rather than push big discounts, Japanese retailer Muji has said that Singles’ Day offered an increased opportunity for the company to “interact and communicate” with local consumers.

“We do not drastically reduce prices to achieve a certain performance at this point in time. This is not what we are doing now,” said Winnie Shao, chief marketing officer at Muji China, during a media interview in Shanghai on Thursday.

“Because people have more freedom this year, whether travelling or going outdoors, some lightweight items that can be used at home or easily taken out have become an important category in this round of campaigns,” said Shao, referring to the post-pandemic situation in China’s retail industry.

Visitors line up at a booth of Ryohin Keikaku Co, the operator of Japanese retailer Muji, at the China International Import Expo in Shanghai on November 6, 2023. Photo: Kyodo

Despite the sluggish mood among consumers, recent retail data has shown improvement in the market. In the third quarter, mainland China’s retail sales grew by 5.5 per cent in September, compared with a 4.6 per cent increase in August.

“The silver economy is expected to continue to be a growing force behind Singles’ Day,” AlixPartner’s Singles’ Day report said. “With the rise of China’s middle class, more affluent senior shoppers are spending on premium products that improve their quality of life.”

Government employee Shen from Jiangsu, meanwhile, pointed out that local consumers have to adapt to the current state of the market. “After all, the economy has its own cycles and we have to live along with them,” she said.

On Wednesday, Shen said she received a message from Estee Lauder that her premium membership will be downgraded at the end of this month because she has not bought any of the brand’s products for a period. Unfazed, Shen said she is happy with her choices.

Additional reporting by Daniel Ren

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