China's e-commerce giants, led by Alibaba and JD.com, kick off promotions for midyear 618 shopping festival
China's major e-commerce service providers, led by rivals Alibaba Group Holding and JD.com, have kicked off promotions for the annual 618 shopping festival, offering steep discounts and various measures to support online merchants amid the nation's faltering economy.
The midyear retail gala, which began in 2004 as a simple sales promotion by Beijing-based JD.com to celebrate its June 18 founding anniversary, has since become the country's second-biggest shopping festival after Singles' Day, which Alibaba had turned into an annual retail extravaganza in 2009. Alibaba owns the South China Morning Post.
JD.com and Pinduoduo started their 618 presales programme on May 23, while Alibaba began its presales campaign on May 26. The presales period allows consumers to make a deposit, which guarantees a low price, on goods they want to buy from an e-commerce platform ahead of the start of 618 sales.
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This year's edition of the 618 shopping festival is expected to serve as a barometer to measure consumer spending nationwide, as extended Covid-19 lockdowns across the country have taken a heavy toll on livelihoods and consumption, putting many people out of work, shuttering businesses and suppressing both supply and demand.
JD.com started the 618 shopping festival in 2004 as a simple sales promotion to celebrate its June 18 founding anniversary. Photo: Shutterstock alt=JD.com started the 618 shopping festival in 2004 as a simple sales promotion to celebrate its June 18 founding anniversary. Photo: Shutterstock>
"Ensuring the stability of supply chain and logistics amid the uncertainties is the best way to improve consumption sentiment and foster a more positive environment for business operations," Alibaba chairman and chief executive Daniel Zhang Yong said during the company's latest quarterly earnings call last week.
Cainiao Network, the smart logistics arm of Alibaba, has dedicated 1 million square metres of warehouse space and another 5 million square metres of peripheral storage facilities to support merchants, according to a company statement on Monday. The government's rigid implementation of its zero-Covid-19 policy has resulted in shipment delays and disrupted logistics operations across the country.
Hangzhou-based Alibaba has started offering immediate payment transfers for merchants for 618 orders, significantly reducing the regular account receivable cycle of 10 to 15 days. That will help ensure merchants achieve better liquidity and greater flexibility during the shopping festival.
"Cash flow was never an issue during previous big campaigns, but having this liquidity this year will be incredibly beneficial," said Hou Yongpu, founder of Yongpu Coffee. "If we receive our payments sooner, then we can pay our upstream suppliers sooner as well."
Alibaba's latest efforts to support merchants come at a time when the Chinese government expects internet platform operators to provide a boost to struggling small businesses and help stabilise the country's economy.
The company's Tmall platform offers an immediate 50 yuan (US$7.50) discount for every qualified 300-yuan purchase. Consumers who have placed large presale orders received additional discount coupons. In previous years, the price-break discounts were normally between 20 and 30 yuan for every qualified 200-yuan purchase.
Beijing-based JD.com, meanwhile, said it has simplified discount rules this year by offering an immediate 50 yuan discount for every qualified 200-yuan purchase. Presales figures of Xiaomi, Huawei Technologies Co and Midea have each surpassed 100 million yuan from the May 23-29 period, according to JD.com.
Earlier in May, China signalled an end to its 18-month long crackdown on Big Tech companies. The period of extraordinary regulation over China's technology giants, which started in late 2020, will come to an end, giving way to market-based and rule-of-law supervision to create a good environment for the growth of the country's internet platforms, according to a front-page editorial in the Economic Daily, a daily newspaper directly under the Central Committee of the Chinese Communist Party.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
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