‘618’ helps JD’s flagging sales: experts

By Wang Cong Source:Global Times Published: 2016/6/20 0:38:01

E-commerce sector competition beneficial to consumers

Commuters walk past metro tunnels decorated with JD.com promotions. Photo: CFP

JD.com, one of China's largest e-commerce websites, on Sunday reported a sales increase on its "618" shopping day, with sales of consumer electronics, groceries and clothes all achieving high sales growth.

The "618" shopping day, which JD.com launched in 2010 to celebrate its anniversary on June 18, joined the annual Singles' Day sale on November 11 initiated by its larger rival Alibaba Group to become one of the largest online shopping sprees in the country.

Though the "618" shopping day is still far behind Singles' Day in terms of sales volume, it helps JD.com, which has been struggling with flagging sales, and shows the growing competition in the country's booming e-commerce sector, which is in the interest of millions of consumers, analysts noted.

From June 1 to June 18, total orders on JD.com exceeded 100 million, and on Saturday alone number of orders increased 60 percent from the same day last year, the company announced in a statement. On Saturday, JD.com's marketplace sold 25 million items, it said.

The number of orders on JD.com's global online shopping mall increased by 17-fold year-on-year, with orders of maternal and infant products jumping 20-fold, according to the company's statement.

The company also reported a year-on-year increase of 600 percent in sales of grocery items such as fresh vegetables, fruits and meat. Sales of consumer electronics such as air conditioners, televisions, with sales of cell phones, computers and digital products also performed well, reaching 40 million orders, the company said.

Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, told the Global Times that this year's "618" shopping day seems to be have been better prepared, such as efforts to expand the variety and quality of products.

Liu Dingding, a Beijing-based industry analyst, also said the firm's deal with Internet giant Tencent this year improved interaction with and services for consumers.

"This year, JD.com is not only focused on prices, but more on the quality of products and services," Liu told the Global Times on Sunday.

The sales performance comes amid JD.com's growth struggles.

Gross merchandise volume on JD.com's retail marketplaces rose 55 percent to 129.3 billion yuan ($20.1 billion) in the three months ending March, down from a 99 percent increase in the same period last year, Bloomberg reported in March.

JD.com's revenue in the first quarter rose 47 percent to 54 billion yuan, just missing analysts' estimate of 54.3 billion yuan, according to Bloomberg.

But the "618" shopping day is "not comparable" to the Singles' Day shopping spree, in terms of sales figures, analysts said.

In last year's Singles' Day, Alibaba reported 91.22 billion yuan in gross merchandise volume (GMV) sales, though that data is now a part of an ongoing investigation into Alibaba by the US Securities and Exchange Commission. JD.com did not reveal its total GMV on Sunday.

Increasing competition

On Saturday, JD.com faced fierce competition, as other online sales platforms, including Alibaba's Tmall and online electronic sales site Suning.com, also participated in the "618" sales promotions.

Suning reported a year-on-year sales growth of 216 percent on the "618" shopping day. But data from Alibaba was not immediately available Sunday.

The competition, focusing on cheaper prices, also pressured some online stores to cheat, some consumers said.

"I used to buy things following the trend, but I discovered later that some retailers would raise prices before the promotions begin," Hailai Xiaoping of Chengdu, Southwest China's Sichuan Province, a regular online shopper both on Taobao and JD.com, told the Global Times on Sunday.

She said some products would actually be more expensive during the sales event than other times.  

Analysts said the fierce competition will likely intensify in the near future, but price gouging is limited, and in the long run, the competition benefits consumers.

"The competition breaks the monopoly; therefore, the competition forces firms to provide higher quality service," said Liu.

Li Yuchen contributed to this report

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