ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Retail

Chinese shoppers push online retail to new heights

JD.com and Alibaba also get lift as consumers opt for 'revenge spending'

Shopping malls in Shanghai and other Chinese cities have remained quiet since the country's coronavirus lockdown ended even as authorities have encouraged a return to normal activity.     © AFP/Jiji

SHANGHAI -- Homemaker Wu Ting rarely goes out these days to buy groceries in Shanghai's markets and malls.

During the city's nearly four-week coronavirus lockdown, she got used to ordering ingredients online for her family of three, something she had never tried before.

Although Shanghai stores began to gradually reopen from Feb. 10, Wu is enjoying the convenience of buying online and staying in for meals.

"We are used to home cooking now," she said.

With China's top online shopping platforms including JD.com, Pinduoduo and Alibaba Group Holding's Tmall busy working toward the climax of their annual early summer "618" promotional sales on Thursday, they are getting a crucial lift from consumers like Wu who have yet to return to their pre-lockdown shopping habits.

While overall Chinese retail sales of consumer goods declined 2.8% in May from a year before, online sales rose 22%, according to data released June 15.

For the year as a whole, U.S. research company eMarketer projects that Chinese online retail sales will rise 16% to $2.09 trillion while total retail revenues contract 4% to $5.07 trillion.

This would put China's overall retail market on course to be the world's largest this year, eMarketer forecasts, as retailers in the U.S., the current leading market, have been much harder hit by COVID-19 -- and to overtake traditional Chinese retail in volume by 2022.

The coronavirus pandemic appears to have created a mass of pent-up spending just waiting to break free. "Wealthy people unable to go on holiday abroad because of the coronavirus are increasingly putting that money toward shopping," a Chinese e-commerce industry insider says. Online stores that sell Louis Vuitton bags and other luxury brand goods are running low on inventory, this person says.

Such conspicuous consumption following the restraint shown during China's coronavirus lockdown has been dubbed "revenge spending" on Chinese social media.

Chinese shoppers who were knuckled down in survival mode during the worst of the country's COVID-19 outbreak are splashing out again. The use of discount vouchers financed by local governments has also helped restart consumption. 

JD.com is spending 10 billion yuan ($1.41 billion) to subsidize promotions during the "618" event, which commemorates the company's launch on June 18, 1998.

"We have seen growth across all product categories so far," said Carol Fung, campaign manager, during an online briefing last Friday.

One Beijing shopper said he had turned up great deals on sports apparel on JD.com. "It was half the price of what I would have paid at the physical store," he said.

New York-listed JD.com is set to debut its shares on the Hong Kong Stock Exchange on Thursday after raising at least $3.88 billion in a secondary share offering.

But much as JD.com has made inroads into Alibaba's traditional showcase "Single's Day" shopping sales set each year for Nov. 11, Alibaba's platforms have taken some of the spotlight away from JD.com's signature event, too.

Participating vendors on Alibaba's Tmall saw gross sales volumes rise 50% in the first 10 hours of this month's promotional event on June 1 compared with a year before, according to Jefferies technology analyst Thomas Chong. Some 200 brands saw their gross volumes go up 10-fold over the first nine days of the shopping festival, he noted.

Momentum for online sales looks set to grow with Chinese consumers feeling shaken about the risks of catching COVID-19 due to this past week's fresh outbreak in Beijing, yet the uncertain economic outlook will also likely restrain their ecommerce activity. EMarketer had previously forecast that Chinese online sales would grow 23.3% this year.

Meantime, China's malls remain quiet. "There are fewer customers these days," said a wine vendor in a middle-class Shanghai mall home to outlets of international brands like Carrefour, Watsons and KFC.

Additional reporting by Naoki Matsuda in Shanghai.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media