The Appeal of June 18… for e-commerce in China
Focus on the social media activations during the 618 Shopping Festival
June 18th marks the middle of the year in China. It is also the anniversary of the founding of JD.com, the e-commerce giant that celebrated its anniversary several years ago by creating the 618 Shopping Festival to compete with Taobao's Double 11. In 2024, with China’s economy slowing down, and e-commerce nearing saturation, the total omnichannel sales of the Festival have dropped by over 50 billion yuan (6.4 billion €) compared to last year, yet still reached a substantial 742.8 billion yuan (95.5 billion €). Against this backdrop, we’ve seen many platforms adjusting their strategies as consumer shopping habits evolve, indicating a new tendency in e-commerce coming thanks to these Shopping Festival Days.
This year, traditional e-commerce platforms such as Tmall, JD, and Taobao have shifted away from merely emphasizing low-price strategies and focused on the quality of platform services. For instance, Taobao and JD have introduced a no-return refund rule to enhance user stickiness. In terms of algorithms, NPS (Net Promoter Score) has become a significant metric for ranking stores, aiming to optimize the overall customer shopping experience. Simply put, the higher a brand's NPS, the greater its visibility in live shopping.
Additionally, Alibaba and JD focused on enhancing VIP members experiences. This includes initiatives such as covering return shipping costs, offering large-value coupons, and implementing unconditional free shipping. Data indicates that on the second day of the 618 event, spending by VIP users increased by 41% compared to the previous year.
2. Social Shopping is Performing Strongly
Recommended by LinkedIn
In the realm of social media, Douyin and Red are undeniably leading the charge in social shopping, with their influence steadily on the rise. Douyin's data from the 618 period reveals impressive figures: live shopping sessions totaled 40.5 million hours, short videos with product links amassed 115.1 billion views, 183 live streams achieved sales exceeding tens of millions of yuan each (1.3 million €), and 758 brands surpassed the ten million yuan mark in sales. Notably, many beauty brands on Douyin surpassed their Tmall counterparts in sales, with examples like Estée Lauder exceeding 100 million yuan (12.8 million €) in sales.
During the 618 festival, Red recorded a remarkable increase in orders, 5.4 times higher than in 2023. Red's precise targeting of demographic segments helps brands swiftly find their target audience. For instance, Chinese beauty brand "Flower Knows" generated 3.4 million yuan (436K €) in sales within just four hours through live shopping.
The broad reach of Douyin and Red's effective demographic targeting capabilities pose significant challenges to traditional e-commerce platforms.
3. Consumers Opted for Brand Stores Livestreams over Mega Influencers’
This year, Chinese consumers were no longer blindly following recommendations from top influencers during live shopping; instead, they preferred engage with brand store accounts. Data shows a significant decline from 70% to 90% in sales for top influencers on Douyin. Major influencers' deep ties with brands often result in their personal image overshadowing the brand's own, compounded by high fees that prompt brands to focus more on optimizing their own store presence.
Platforms like Douyin, Red, and Kuaishou have seized this opportunity by launching services to enhance brands' social shopping capabilities. Taobao's data highlights that 67 store livestreams generated sales exceeding tens of millions within four hours. During the 618 period, 38 livestreams surpassed sales of over 100 million yuan each, setting a new record for the same period in history.
4. Leveraging AI in Live Shopping, Platforms had different strategies
JD, having invested heavily in digital avatar live shopping, had over 5,000 brands using digital avatars during this year's 618 event. The total live streaming time exceeded 400,000 hours, attracting over 100 million viewers.
However, digital avatar live shopping is still in the exploratory stage, and various platforms are approaching it with caution. For example, Kuaishou does not support traffic for such merchants, and Channels (WeChat’s video function) does not allow it at all. Kuaishou announced that it preferred to see real live content, encouraging real-time interactions between merchants and consumers to foster deeper emotional connections and enhance the purchasing experience.
5. Conclusion & Learnings
Overall, the 618 Festival in 2024 was relatively calm regarding the economic context. Traditional e-commerce platforms focused on enhancing services to retain consumers and counter the challenges posed by social media. Douyin and Red performed exceptionally well in social shopping and live shopping, especially Red's precise targeting showcasing its immense potential.
The impact of influencers is decreasing during 618 as consumers become more rational, preferring to shop in brand livestream rooms. Brands could shift their marketing strategies from merely collaborating with influencers to producing more high-quality paid or organic content. Additionally, there is a growing emphasis on training store sales in live streaming skills.
Clearly, e-commerce finds a tremendous boost on social media platforms. In a challenging economic environment, these platforms enable brands to stay on course. The next significant date to watch closely, but this time across the Atlantic, is July 9th: TikTok is set to launch "Deals for You" days in the United States, an initiative directly competing with Amazon and its Prime Day sales on July 16th and 17th. This e-commerce battle promises to be exciting and will show whether the power of social commerce can be decisive in winning it.
Source: dsb.com, JING DAILY